Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

EAST HAM CORPORATION BILL [Lords]

Read the Third time and passed, with Amendments.

ESSO PETROLEUM COMPANY BILL [Lords]

Queen's Consent, on behalf of the Crown, signified.

Bill read the Third time and passed, with Amendments.

HASTINGS TRAMWAYS BILL [Lords]

Read the Third time and passed, without Amendment.

STANDING ORDERS (PRIVATE BUSINESS)

The Deputy-Chairman of Ways and Means (Sir Gordon Touche): I beg to move,
That the several Amendments to Standing Order 11 (Publication of notice in the Gazette)relating to Private Business hereinafter stated in the Schedule be made.

SCHEDULE

Standing Order 11, line 5, leave out "or and insert "Gazette or in the".

Standing Order 11, Line 22, leave out "whether" and insert "either".

Standing Order 11, Line 25, at end add—
Provided that a notice published in the Edinburgh Gazette or in the Belfast Gazette need contain such only of the particulars referred to in the foregoing paragraphs (c)and (d)as relate to Scotland or to Northern Ireland, as the case may be".

The first two of these Amendments are drafting improvements. The third Amendment has the effect of shortening the notices given in Edinburgh and Belfast by omitting some unnecessary matter. I understand that similar Amendments are to be moved to the Standing Orders in another place.

Question put and agreed to.

Oral Answers to Questions — TRADE AND COMMERCE

Hire-Purchase Agreements

Mr. Osborne: asked the President of the Board of Trade if, as a step towards combating inflation, he will increase substantially the deposit required on all hire-purchase agreements, and reduce the time and number of payments to complete.

The President of the Board of Trade (Sir David Eccles): No, Sir.

Mr. Osborne: Is my right hon. Friend aware that quite recently one of the leading hire-purchase finance corporations showed an increase in bank overdrafts and loans of no less than £4 million in one year? Why should these corporations be exempted from the credit squeeze? Since inflation is the one great danger that the country faces, why does not my right hon. Friend do something about it?

Sir D. Eccles: The outstanding hire-purchase debt fell by some £90 million during 1956 and had risen by the end of May this year by £12 million. I do not think that that is a very serious change.

Royal Ordnance Factory, Swynnerton (Closure)

Mr. Swingler: asked the President of the Board of Trade (1)what plans he is making for the disposal of the Royal Ordnance Factory at Swynnerton in such a way as to create a higher level of employment in North Staffordshire;

(2)if he is aware of the need for new industry in North Staffordshire; and what steps he is taking to make this need widely known.

Mr. Ellis Smith: asked the President of the Board of Trade if he will arrange for the Swynnerton site to be made a development area site extending the same concessions and facilities to future industrialists who are prepared to commence production on the site.

Sir D. Eccles: It is too soon to say what local difficulties the closure of Swynnerton may create, but my right hon. Friend the Minister of Labour and I will watch the position closely. The


Board of Trade will bring to the notice of firms seeking new premises the facilities available at Swynnerton and elsewhere in North Staffordshire.

Mr. Swingler: Is the right hon. Gentleman aware that it is not too soon to say that unemployment in North Staffordshire has been higher than the national average for a long time and that the redundancies at these Royal Ordnance factories are liable to accentuate the problem? Is the right hon. Gentleman aware of the need for a speedy move to make plans for the disposal of these factories and for some constructive civil employment for these workers before they are thrown on to the scrap heap?

Sir D. Eccles: Employment in the pottery industry, I am glad to say, is better than it was. I agree with the hon. Gentleman that we must do our best in regard to the workers who may become redundant at Swynnerton, and we will.

Mr. Ellis Smith: At a time and on a day convenient to the President next week, will he receive a deputation consisting of the six North Staffordshire Members of Parliament in order that we can deal with the matter, and, if so, will he arrange to have present his officers who operate the Distribution of Industry Act? In view of the fundamental difference between those referred to in the White Paper yesterday and our own people, will the right hon. Gentleman treat the matter as one of urgency?

Sir D. Eccles: Yes, Sir. I am very ready to see Members of Parliament on anything.

Mr. S. Silverman: In view of the right hon. Gentleman's offer to receive the deputation to which my hon. Friend referred, would he consider receiving at the same time Members of Parliament from North-East Lancashire so that they may hold a watching brief and give the benefit to the Staffordshire Members of their experience of the working of development councils so far as North-East Lancashire is concerned?

Sir D. Eccles: I think I will see the Members of Parliament from North Staffordshire first.

Mr. Ellis Smith: Whilst appreciating the right hon. Gentleman's reply, will he

bear in mind that our percentage of unemployment is double the number to which the hon. Member referred?

Surplus Royal Ordnance Factories

Mr. Swingler: asked the President of the Board of Trade what machinery he has established to assist in the disposal of Royal Ordnance factories which are no longer required for arms manufacture.

Sir D. Eccles: The existing machinery for consultation between Government Departments, and for bringing surplus Government factories to the notice of industrialists, will be used. If the Government has no alternative use for one of these factories, particulars are sent to Board of Trade regional controllers who are in close touch with firms needing new premises.

Mr. Swingler: Is the President aware that the workers in these factories have more often than not rendered long and distinguished service to the country, often under very difficult conditions, and have built up a high esprit de corps; and that it would be a serious loss to the country if such labour forces were dispersed? Therefore, is he aware of the need to make speedy plans for the utilisation of these factories before creating new pockets of unemployment amongst workers who have rendered such great services to the country?

Sir D. Eccles: Yes, Sir. We certainly intend to do what we can, and I will discuss the particular difficulty with the hon. Member next week.

Weights and Measures

Mrs. Mann: asked the President of the Board of Trade the items of food in which variation is permitted between net and average weight, and the permitted variation.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll): Weights and measures law requires minimum net weight to be marked on the containers of many pre-packed foods, but lays down no conditions about marking with average weight.

Mrs. Mann: Is the Parliamentary Secretary aware that the Weights and Measures Report urges that net weight only should be shown, and that inspectors have been


asking for this for a number of years? When does he expect to give effect to their requests?

Mr. Erroll: My understanding of the Hodgson Committee's Report is that it did not recommend any alteration in the legal position relating to the marking of average weight.

Mrs. Mann: Will the hon. Gentleman read the Report again?

Mrs. Mann: asked the President of the Board of Trade the items of non-food commodities sold to the public and in general use on which there is no statutory obligation to state weight, or number within boxes or packets.

Mr. Erroll: All non-food commodities, whether pre-packed or not, except coal in sales over 2 cwt., and sand and ballast in sales over 1 ton or 1 cubic yard, can be sold without a statement of weight or number.

Mrs. Mann: As there is such a wide fluctuation over such a great variety of items, can the hon. Gentleman say how it is possible accurately to assess the cost-of-living index?

Mr. Erroll: The assessment of the cost-of-living index is a matter for my right hon. Friend the Minister of Labour.

Mrs. Mann: asked the President of the Board of Trade the items of food or substances used in the making thereof which can be sold to the public under his Regulations without any obligation to state average or net weight.

Mr. Erroll: I am sending the hon. Lady the long list of foodstuffs which must be sold with some statement of their weight, measure or number.

Mrs. Mann: Is the Parliamentary Secretary aware that that will be much preferable to his giving to a supplementary of mine an idiotic answer?

Mrs. Slater: Is the Parliamentary Secretary aware that in these days of self-service shops, of packaged goods and packaged vegetables, there is a very urgent need, in the interest of the housewife, for the Government to do something about extending the list of commodities which must be marked with an average weight, and will the Government say when they are prepared to do something about it?

Mr. Erroll: I think that it is important to distinguish between net weight and average weight.

Sulphate of Ammonia

Mr. Willey: asked the President of the Board of Trade whether he will withdraw the Customs Duty on imported sulphate of ammonia.

Sir D. Eccles: If an application for removal of this duty is made by users, I will consider it.

Mr. Willey: In any case, will the right hon. Gentleman look at this again, because the users have the benefit of a subsidy? Surely he is aware that this sulphate of ammonia is marketed by a very tight monopoly, and that we have no reflection in this country of the sharp falling of prices in America and all Europe.

Sir D. Eccles: The figures do not seem to bear out what the hon. Gentleman has just said. United Kingdom production is running at about one million tons per annum, and imports in the first five months of this year were fifty tons.

Dundee

Mr. G. M. Thomson: asked the President of the Board of Trade (1)what efforts he is making to bring new industry to Dundee under the provisions of the Distribution of Industry Act;

(2)if he will relax his instructions regarding the building of Government-financed factories to rent in respect of the Dundee Development Area.

Sir D. Eccles: I cannot at this stage add to the statement I made after Questions on 17th July, and to the further details given by my right hon. Friend the Secretary of State for Scotland in the debate on Industry in Scotland on 18th July.

Mr. Thomson: In view of the new situation in Dundee, will the President now reverse his decision and re-open the local office of his Department there, and at least put Dundee on a par with Inverness? Will he also promise the House that he will refuse some industrial development certificates in London and the Midlands, and tell the industrialists who wish to develop to do so in Dundee?

Sir D. Eccles: I hope to do rather better than the hon. Gentleman suggested; but, about the local office, I would say that the Jute Controller has his office in Dundee, and I think that we must put this difficult problem into the hands of officials at a pretty high level. As to his second point, certificates are refused for London for new factories. We will do all we can to persuade industrialists to go to Dundee, but we cannot compel them.

Mr. Strachey: Would not the President agree that the fact that the Jute Controller has his office in Dundee has very little to do with the Board of Trade having a local office there? That is what my hon. Friend was speaking about. Is the right hon. Gentleman aware that the closing of the local Board of Trade office in Dundee is, rightly or wrongly, regarded by the inhabitants of that city as a sign that the Government have lost interest in bringing in new industries and that nothing but re-opening that office will really give the citizens of Dundee confidence that efforts are to be made to bring industries into Dundee?

Sir D. Eccles: The Jute Controller, of course, gives us the facts about employment in the jute industry which are very important in this matter; and I hope to make arrangements that will satisfy the people of Dundee that they are better off than they would have been if they had just had the old office.

Mr. Nabarro: Would my right hon. Friend bear in mind that the demise of the Jute Control would not be lamented in Kidderminster?

Mr. Jay: Can the President confirm what I thought he said in his statement ten days ago; that the Board of Trade is now prepared to build Government-financed factories, at any rate in Dundee?

Sir D. Eccles: The Treasury is prepared to make an exception of Dundee in granting loans for the building of factories when we can find someone who wants to go there.

Trade Commissioner's Office, Canada

Mr. de Freitas: asked the President of the Board of Trade what changes he has made in the staffing of the United

Kingdom Trade Commissioner's office in Canada so that greater help can be given to our exporters who wish to increase their sales in Canada.

Sir D. Eccles: Our commercial representation in Canada is kept under constant review. There has been an increase in strength during the last three years bringing the total to almost four times pre-war. According to the reports which I receive from many sources, the present arrangements are working satisfactorily.

Mr. de Freitas: But what about the present and future position? The Canadian Government have announced their policy of increasing imports from this country? Is he really satisfied that the organisation and staffing in Canada is good enough to enable us to take full advantage of that?

Sir D. Eccles: If I am not satisfied—and, of course, I shall look at it in the light of the Canadian Government's policy—I will certainly try to improve it further.

Motor Industry

Mr. Edelman: asked the President of the Board of Trade whether his attention has been drawn to the increasing control by North American companies of firms in the British motor industry; and what action he has taken, through the Motor Industry Advisory Council, to ensure that the policy of the motor industry as a whole remains subject to the requirements of national policy.

Sir D. Eccles: If by North American the hon. Gentleman means the Canadian people who have stood loyally by Great Britain for 200 years, I see no reason why they should not invest in the British motor industry.

Mr. Edelman: The right hon. Gentleman has begged the Question. Is it not the case that with the prospective sale of the Standard Motor Company, more than half of the British motor industry will have passed into North American hands; and that in spite of the fact that Massey-Harris-Ferguson's is nominally a Canadian company, a great deal of the shareholding is in American hands? Does he consider it desirable that the policies of this great exporting and strategic industry should be decided in America. Will not the Government take


action to ensure that the industry's policies are decided, not in Detroit, but here in Britain?

Mr. Ellis Smith: It is a bit late in the day.

Sir D. Eccles: I think that the hon. Gentleman is rather unfair to the American-controlled companies here, which have really made a very valuable contribution to our exports. I think that this investment by the Massey-Harris-Ferguson company here will be a good thing.

Mr. Osborne: Is not it a fact that American capital in Dagenham and Luton has brought prosperity and high wages to the workers in those towns? Is my right hon. Friend aware that no steps should be taken to prevent capital, which we are unable to provide, coming to this country?

Mr. Beswick: Will the right hon. Gentleman also take into account that, whatever short-term advantages there are, the long-term liabilities of this country in exporting capital to service the American capital invested here are also increased? Is he assuring the House that he is satisfied to see more than a majority of this large British industry, the motor car industry, passing into American control?

Sir D. Eccles: The House should not take it that it is more than half. My information is that at present, even with the Standard purchase, the proportion of the industry in British hands will still be more than half. However that may be, investment here by American companies on a reasonable scale has been a net benefit to the country.

Mr. Edelman: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise the matter on the Adjournment.

Textile Mills, Prinlaws

Mr. Hamilton: asked the President of the Board of Trade if his attention has has been drawn to the threatened closure of certain textile mills at Prinlaws, Fife; and what steps he is taking in so far as his Department's responsibilities are concerned.

Sir D. Eccles: Yes, Sir, and the Board of Trade will take advantage of any suitable opportunity to bring these premises,

if they are closed, to the notice of industry, thus supplementing the firm's efforts to find a new occupant.

Mr. Hamilton: Is the President of the Board of Trade aware that the threatened closure of these mills will cause unemployment to about 300 people, which is a very serious problem in this area as unfilled vacancies are now rather fewer than the number unemployed? What specific proposals does he have to ensure that if and when these mills become vacant they will not be left empty while there is unemployment in the area?

Sir D. Eccles: Unemployment in the Kirkcaldy district is low; it is only 1·5 per cent. If these mills are closed, the first thing which the firm will try to do, naturally, is to find a new occupier. We will give all the help we can.

Paper Sack Industry

Mr. Kirk: asked the President of the Board of Trade what evaluation he has made of the effect on the paper sack industry of the recent changes in jute control.

Sir D. Eccles: The changes referred to are likely to make imported jute sacks cheaper and should therefore improve their competitive position against substitutes. The precise effect on paper sacks which I cannot estimate will depend on a variety of commercial factors.

Mr. Kirk: Will my right hon. Friend bear in mind that the paper sack industry is very worried about this development? In circumstances like this, would it not be better to have consultations with other industries likely to be affected by moves of this kind?

Sir D. Eccles: The paper sack industry got a measure of fortuitous protection. It would be impossible to consult all the industries with contrary interests and expect to get any kind of decision.

Mr. Strachey: Does the right hon. Gentleman now agree that his move to dismantle jute control is obviously pleasing nobody.

Mr. Nabarro: It is pleasing me.

Sir J. Duncan: Is my right hon. Friend aware that in the opinion of the jute


trade the mark-down is not sufficient to make any inroads into the paper bag trade? The jute industry is very worried by the statement he made last week and wants an early assurance that the markdown will at any rate be permanent for the next few years.

Sir D. Eccles: My hon. Friend the Member for South Angus (Sir J. Duncan)had better speak to our hon. Friend the Member for Gravesend (Mr. Kirk), because the hon. Member for Gravesend evidently feels that it will have some effect on the paper trade. We must see how it goes on. It is impossible to give an assurance for some years.

Apples (Import)

Mr. P. Wells: asked the President of the Board of Trade whether he will make the quota for imports of apples from the Organisation for European Economic Co-operation countries dependent upon weight of imports and not on their monetary value.

Sir D. Eccles: No, Sir. Such a change would involve us in great practical difficulties.

Mr. Wells: Is the President of the Board of Trade aware that the c.i.f. price of Italian apples has fallen so low as to afford no protection to the home producer? Will he look at this matter again, bearing in mind that this section of agriculture gets no assistance from subsidies?

Sir D. Eccles: The hon. Member possibly exaggerates the result of the fall of price. From July, 1956, to July, 1957, 59,000 tons costing £2·88 million were brought in, while 42,500 tons costing £2·4 million were brought in two years before. There was not such a tremendous difference in the prices.

Oral Answers to Questions — NATIONAL FINANCE

Investment in Canada

Mr. Shepherd: asked the Chancellor of the Exchequer the amount of British investment in Canada in the year 1951 and subsequent years.

The Economic Secretary to the Treasury (Mr. Nigel Birch): As the Answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Shepherd: Can my right hon. Friend say whether investment in Canada has been increasing in recent years? Is it the desire of the Government to enable firms who want to invest in Canada to set up industries there to continue to do so?

Mr. Birch: We certainly wish to encourage direct investment in Canada to the extent we can afford. The Treasury is fairly liberal in allowing investment, especially where we can use our know-how and where there are good prospects.

Following is the Answer:

Figures published by the Canadian Government for 1951 to 1955 inclusive show that over these five years United Kingdom net direct long-term investment in Canada totalled nearly £125 million. For figures for individual years, I would refer my hon. Friend to my reply on 7th February to the hon. Member for Manchester, Blackley (Mr. E. Johnson).

Figures are not yet available for 1956 but preliminary data suggest that the long-term capital inflow from the United Kingdom in that year was at about twice its level in 1955.

Inflation

Mr. Ellis Smith: asked the Chancellor of the Exchequer if he will recommend the appointment of a Royal Commission or a Departmental Committee to consider what action shall be taken to avoid further inflation and achieve a gradual reduction in costs.

Mr. Birch: I would refer the hon. Gentleman to the Answer which I gave to the right hon. Gentleman, the Member for Easington (Mr. Shinwell)on 11th July.

Mr. Ellis Smith: Is the right hon. Gentleman aware that those of us who were in Germany during the days when inflation ran mountain high are becoming very concerned about the growing inflation in this country? Has not the time arrived to take action instead of having so much talk?

Mr. Birch: This is a matter which we are about to debate. The hon. Member has often made very valuable contributions to our economic debates and I hope that he will be able to do so today and put the hon. Member for Coventry, East (Mr. Crossman)in his place.

Mr. Shinwell: Is the right hon. Gentleman aware that my proposal the other day about the appointment of an impartial body to consider inflation and its consequences is now being supported by many eminent industrialists, financiers, sociologists, including Lord Beveridge, and others? Is there any reason why a body of this kind should not be competent enough to make recommendations on the subject?

Mr. Birch: This is the same Question which the right hon. Gentleman raised the other day. I answered then that I thought that a Royal Commission or a Select Committee was not suitable to deal with the wide-ranging implications of such an inquiry.

Purchase Tax

Mr. Godman Irvine: asked the Chancellor of the Exchequer if he is satisfied that recent reductions in Purchase Tax have, in most cases, been passed on to the consumer; and if he will make a statement.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): My right hon. Friend is satisfied that all reductions of Purchase Tax result in the retail prices of the articles concerned being lower than they would otherwise be.

Dame Irene Ward: asked the Chancellor of the Exchequer what inquiries he is conducting into the anomalies of Purchase Tax.

Mr. Powell: My right hon. Friend is examining the points raised in the debates on the Finance Bill.

Dame Irene Ward: While thanking my hon. Friend for that bit of news, may I ask him if he would kindly convey to his right hon. Friend the fact that the housewives of this country will be very grateful, because they are increasingly concerned about the absurdity of the anomaly?

European Free Trade Area

Sir I. Fraser: asked the Chancellor of the Exchequer the latest state of the negotiations on the establishment of a European Free Trade Area.

Mr. Birch: I would draw the attention of my hon. and gallant Friend to the Answer I gave on 17th July to the

hon. Member for Sunderland, North (Mr. Willey).

Sir I. Fraser: Is the right hon. Gentleman aware that the longer the delay in explaining this matter to the public, the worse will be public opinion's regard for it?

Mr. Birch: Many hon. Members have made speeches in the country on this subject. I have made many myself. We are, however, pressing on with negotiations as rapidly as we can.

Cunard Steamship Company Limited

Mr. Edelman: asked the Chancellor of the Exchequer what voting powers Her Majesty's Government exercise in the affairs of the Cunard Steamship Company Limited arising from the possession of one £20 Government share; what benefit has arisen from the possession of £46 Ordinary shares; and what part the Government exercise as a result of the ownership of these shares in the direction of the company's affairs.

Mr. Birch: The £20 Government share issued in 1903 confers a voting right equal to 25 per cent. of all other votes in the event of a proposal to amend the articles of association of the company in order to allow any shares to be owned by foreigners. Her Majesty's Government have had no occasion to exercise this right.
The answer to the second part of the Question is that the Government have received dividends paid on their shares.
The answer to the last part of the Question is "None."

Mr. Edelman: Does not the right hon. Gentleman consider that that principle might well be applied to the motor industry to provide the same sort of safeguard as was thought necessary in 1903 for our shipping?

Mr. Birch: As the hon. Member knows, since 1903 the Exchange Control Acts have been operating, and the Government now have control over the acquisition of the control of companies in this country.

Village Halls (Trustees)

Mr. Dye: asked the Chancellor of the Exchequer what steps are being taken


to resolve the difficulties facing the trustees of village halls since the judgment in the House of Lords in the Baddeley case some two years ago; and when he expects to reach a solution of this matter.

Mr. Powell: I would refer the hon. Member to the reply I gave to the hon. Member for Wallsend (Mr. McKay)on the Report stage of the Finance Bill on 16th July.

Mr. Dye: Is the hon. Gentleman aware that many trustees of village halls are frustrated in their efforts to provide accommodation for the village people because of the decision in this case?

Mr. Powell: I am aware of the difficulties which the decision in the Baddeley case has presented and the Government are anxious to remedy the situation comprehensively as soon as possible.

Radio and Television (Dollar Expenditure)

Captain Pilkington: asked the Chancellor of the Exchequer how much sterling is paid to the United States of America in royalties for the copyright of parlour games on radio and television.

Mr. Birch: I regret that separate figures of dollar expenditure on transactions of this kind are not available.

Captain Pilkington: Can my right hon. Friend say whether the game "Twenty Questions" is included? If so, is he aware that it is on record that Hannah Moore and Mrs. Fielding taught this game to Lord Palmerston in 1786—so should copyright be paid for?

Mr. Birch: The answer to the first part of my hon. and gallant Friend's supplementary is that I do not know; the answer to the second part is that I am always grateful to receive information.

Mr. H. Wilson: Is the right hon. Gentleman aware that Lord Palmerston was only two years old at that time, though he was always a little precocious? Apart from that, is he aware that many of us share the concern of the hon. and gallant Member for Poole (Captain Pilkington)on this point, in that most of these things are games which have been played for, perhaps, hundreds of years in this country, and it is quite fantastic that anybody should copyright them, but that, to my knowledge, when

questions have been put to B.B.C. sources about it, we have been told that we do not have to pay royalties for games of this kind, and if we had to, the names could always be changed and the games be kept?

Viscount Hinchingbrooke: Is my right hon. Friend aware that Lord Palmerston at that time, like the right hon. Member for Huyton (Mr. H. Wilson), walked about without any shoes?

Captain Pilkington: Does my right hon. Friend appreciate that, apparently, the right hon. Member for Huyton is not aware that there was more than one Lord Palmerston?

Mr. Speaker: Order. I do not see what Lord Palmerston has to do with this.

Arts Council (Scottish Representation)

Mr. G. M. Thomson: asked the Chancellor of the Exchequer whether he will take steps to increase the Scottish representation on the Committee of the Arts Council.

Mr. Powell: The affairs of the Arts Council in Scotland are managed by a Scottish Committee, which meets in Edinburgh, and distributes the grant allotted to Scotland by the Council.

Mr. Thomson: Is the Financial Secretary aware that we are anxious in Scotland that the Arts Council nationally should be made conscious of some immediate dangers facing the repertory theatre movement in Scotland, and we are anxious, too, that the Arts Council should give some sympathetic consideration to special assistance in order to overcome these temporary difficulties?

Mr. Powell: There is every opportunity for Scottish interests to be represented on and to the Council.

Roads Programme

Captain Pilkington: asked the Chancellor of the Exchequer the percentage of present investment in the roads programme as compared with that in electricity, coal and railways, respectively.

Mr. Powell: As the Answer contains a number of figures, I will with permission publish it in the OFFICIAL REPORT.

Captain Pilkington: In view of the fact that the percentage is, I have no doubt, extremely small, does not my hon.


Friend think that there should be a review in order to increase the very necessary expenditure on the roads programme?

Mr. Powell: I think that, when he studies them, my hon. and gallant Friend will find that the figures do cast an interesting light upon the proportions.

Following is the information:

The figures for 1956 are as follows:—



£ million
Per cent.


Total gross fixed investment
3,139
100


Road transport—


Roads and public lighting
29
0·9


Road vehicles—


public passenger vehicles
19
0·6


goods vehicles
144
4·6


cars*
122
3·9


Total vehicles
285
9·1


Railways—


Rolling stock
65
2·1


Other
27
0·8


Total railways†
92
2·9


Electricity†
247
7·9


Coal mining†
84
2·7


* Business expenditure only.


† Includes small amounts for road vehicles.

£5 Note (Design)

Mr. Shepherd: asked the Chancellor of the Exchequer what further criticisms he has received in respect of the design of the new £5 note; and what steps he now intends to take in this matter.

Mr. Powell: None, Sir.

Mr. Shepherd: Is my hon. Friend really satisfied with this note, which looks like a cross between stage money and the £1 Scottish bank note, and will he really do something to ensure that these designs are submitted to the Council of Industrial Design before they are launched on an unsuspecting public?

Mr. Powell: The design was considered very carefully before it was introduced, and the bulk of the information reaching my right hon. Friend is that the new note is proving popular.

Mr. Steele: Is the Financial Secretary aware that the staffs in shops and other places in Scotland are very much concerned about this £5 note, because it is so like the Scottish £1 note that there

is great danger of giving one away in change for another £5 note?

Mr. Bowles: Is the Financial Secretary aware that it has been reported in the Press during the last week that a bank in Ireland paid out £1,000 instead of £200 because it had mistakenly used £5 notes instead of £1 notes?

Overseas Investment

Mr. Shepherd: asked the Chancellor of the Exchequer the amount of money, in dollars, paid by the United Kingdom to overseas countries between the years 1945 to 1955 in respect of grants of assistance, loans, and reductions of principal and interest on loans, respectively, and also in dollars, the amount of private investment by United Kingdom nationals in overseas territories during this period.

Mr. Birch: As the Answer contains a number of figures I will, with permission, circulate it in the OFFICIAL REPORT.

Following is the information:

During the ten years 1946–55. Government grants of assistance and loans—including pre-1946 debts written off—to overseas countries totalled £1,300 million. Payments by the United Kingdom to overseas countries of interest on and repayments of principal of inter-Government loans to the United Kingdom amounted to nearly £900 million. The amount of gross private investment by the United Kingdom is very uncertain but it probably totalled about £2,000 million.

These figures cover payments in many currencies, including dollars, and I have therefore given the totals in sterling.

£ Sterling (Value)

Mr. Jay: asked the Chancellor of the Exchequer what steps he proposes to restrain the growth of inflation and preserve the value of the £ sterling.

Mr. Birch: These matters are to be debated this afternoon.

Mr. Jay: Can we be assured now, in view of the Chancellor's recent alarmist speeches, that he will this afternoon put forward concrete proposals?

Mr. Birch: No doubt the right hon. Gentleman will listen with attention to what my right hon. Friend has to say.

Mr. de Freitas: asked the Chancellor of the Exchequer whether he is aware that, taking the internal purchasing value of the £ sterling as 20s. in October, 1951, it had declined to 18s. 3d. by June, 1953, 17s. 3d. by June, 1955, and 16s. 5d. by June, 1956; and what was the comparable figure for June, 1957.

Mr. Birch: The answer to the first part of the Question is "Yes." The answer to the second part is 15s. 11d. These calculations are based on the Index of Retail Prices.

Mr. de Freitas: In view of the Chancellor's contradictory statements, can the Minister clear up the question which has been asked in the Press and elsewhere whether this continuing decline in the value of the £ is to be taken as a grim warning of the bright future that looms ahead, or, on the other hand, as an encouraging sign of the impending doom which brightens our prospects?

Mr. Birch: While appreciating the hon. Gentlemen's ready wit, I would ask him to await my right hon. Friend's speech.

Bank Credit (Control)

Mr. Jay: asked the Chancellor of the Exchequer what action he proposes to check the renewed expansion of bank advances.

Mr. Lewis: asked the Chancellor of the Exchequer if he is aware that the banks have allowed a £83,300,000 June increase in overdrafts, bringing the total to over £2,000 million; that, since January, despite the Treasury directives, the banks have allowed these overdrafts to increase by nearly £216 million; whether he will take powers to inquire to whom these overdrafts have been issued and for what purpose; and what action he proposes to take to stop these inflationary activities of the banks.

Mr. Birch: The increase in the end-June figures is partly seasonal. The mid-July figures published today show a reduction since end-June of £88 million. Taken together, these figures do not lead my right hon. Friend to conclude that the arrangements for the control of bank credit announced in his Budget statement of 9th April are not operating to good effect.

Mr. Jay: Does the Economic Secretary then think that no further measures are necessary at all?

Mr. Birch: I would ask the right hon. Gentleman to await my right hon. Friend's speech.

Dividends

Mr. Cronin: asked the Chancellor of the Exchequer if he will now put in hand measures to obtain general dividend limitation.

Mr. Birch: Restraint in the payment of dividends is certainly still necessary, but I doubt whether statutory regulation would most effectively secure this. Different companies have different needs, and I think that it is generally best to rely on the judgment of responsible managements.

Mr. Cronin: Does the right hon. Gentleman appreciate that the Government's emphasis on the desirability of limiting wage increase claims would convey much more conviction if some definite action were taken to limit this very inflationary source of income?

Mr. Birch: The hon. Gentleman will, of course, appreciate that dividend policy as a whole in this country is far more conservative than it was before the war. Before the war, about 60 per cent. of income was distributed, and now the proportion is only about 29 per cent.

Dollar-Earning Assets

Mr. H. Wilson: asked the Chancellor of the Exchequer why Her Majesty's Treasury are insisting that potential borrowers requiring capital for dollar-earning assets such as oil tankers should borrow the necessary capital in New York, involving dollar repayments, instead of making the necessary arrangements to allow the money to be borrowed in this country.

Mr. Birch: The Treasury does not insist that potential borrowers of capital for dollar earning assets should borrow abroad.

Mr. Wilson: In the particular case of which details were sent to the Treasury, is the right hon. Gentleman aware that finance could have been obtained in this country if Treasury permission had been forthcoming? Does not it seem a wrong


policy that, when we can earn dollars in this way, we should not attempt at any rate to raise the finance in this country instead of adding to our dollar obligations?

Mr. Birch: If I am right in identifying the company which the right hon. Gentleman has in mind, it was refused a loan by the Ship Mortgage Finance Company, on the ground that, by its constitution, the Ship Mortgage Finance Company cannot lend money for the construction of ships abroad, and it was the construction of ships abroad which was in issue.

Mr. H. Wilson: While one is well aware of that, is not the right hon. Gentleman willing to look at this in order to see whether, in so far as the Treasury has control over this matter, it could not relax these conditions, bearing in mind that the Exports Credit Guarantee Department is quite willing to provide facilities for third country trade and does not insist on the expenditure in this country?

Mr. Birch: The demands on the resources of the Ship Mortgage Finance Company in financing construction in this country are very considerable, and I do not think that it would really help if we were to alter its constitution.

Commonwealth Finance Ministers' Meeting

Sir I. Fraser: asked the Chancellor of the Exchequer when and where it is proposed to hold a Commonwealth Economic and Trade Conference.

Mr. Birch: As the House knows, the Prime Minister of Canada has invited the Commonwealth Finance Ministers to hold a meeting in Ottawa at the end of September. My right hon. Friend looks forward to attending this meeting, which will provide an opportunity of considering the general questions of Commonwealth economic development and Commonwealth trade. The question whether a further and special meeting would be useful will, no doubt, be discussed in Ottawa.

Indian Rupee (Stability)

Mr. Cronin: asked the Chancellor of the Exchequer if he will consider affording credit facilities to India solely with a view to maintaining the relative stability of the rupee.

Mr. Birch: The maintenance of the stability of the rupee is the responsibility of the Government of India. Their reserves of gold and foreign exchange are substantial and amounted on 12th July last to £419 million.

Mr. Cronin: Does the right hon. Gentleman appreciate that Britain's position as banker to the sterling area will become rather precarious if prompt and sufficient help is not given to member countries which are in difficulty?

Mr. Birch: As I said, India has very considerable reserves in this country, upon which she is entitled to draw.

Mr. Roy Jenkins: Whose responsibility is the maintenance of the stability of the £?

University Grants

Mr. Rankin: asked the Chancellor of the Exchequer what representations he has received about the insufficiency of the allocations made by the University Grants Committee for the quinquennium beginning on 1st August of this year.

Mr. Powell: None. Sir.

Mr. Rankin: Is not the Financial Secretary aware that there have been reports in the Press that all the universities in the country are disturbed by these allocations, and in particular by the fact that in these general grants to each university the allocation to each faculty is also designated, and, in some cases, sufficient emphasis is not placed by some universities on the need for expanding technological education? Will the Minister take note of that aspect of the matter?

Mr. Powell: These are misconceptions. The recurrent grant is not allocated to subjects, but it is a block grant to the universities concerned. My right hon. Friend, and, I think, the University Grants Committee, have received no representations as regards the distribution between universities.

Standard Motors, Ltd.

Mr. Edelman: asked the Chancellor of the Exchequer whether he has yet authorised the sale by Messrs. Standard Motors, Limited to Messrs. Massey-Harris-Ferguson, Incorporated, of the ordinary shares of the company.

Mr. Birch: Yes, Sir. Permission under the Exchange Control Act, 1947, has been given.

Mr. Edelman: While regretting that reply, may I ask the right hon. Gentleman to inquire into the extent to which shares in the purchasing company are held in the United States? Will he bear in mind that the interests of the American motor industry do not necessarily correspond with the interests of the British industry?

Mr. Birch: If that is so, I will certainly inquire into it.

Post-war Credits

Mr. Short: asked the Chancellor of the Exchequer whether he will make arrangements to invest all outstanding post-war credits in Premium Bonds, pending their withdrawal under the existing regulations.

Mr. Powell: No, Sir.

Mr. Short: Will the Minister say why not? What is the objection? Why cannot it be done? Would it not be a reasonable compromise between repaying the whole lot and the present unsatisfactory arrangements, which do not commend themselves to anybody?

Mr. Powell: The purpose of the Premium Bonds is to serve as vehicles for new savings, and not as a means of distributing money raised by taxation.

Inland Revenue Officers, Cardiff

Mr. Gower: asked the Chancellor of the Exchequer to what extent a knowledge of the Welsh language is deemed to be a qualification for the post of an inspector-in-charge and an inspector of Inland Revenue, respectively, at Cardiff; and if he will make a statement.

Mr. Powell: Such knowledge is a relevant but not essential qualification.

Small Fixed Income Groups

Dame Irene Ward: asked the Chancellor of the Exchequer what examination he is making into the position of pensioners for whom the Treasury is responsible; and the tax position of those on small fixed incomes who will be affected by the rise in fuel costs and rents.

Mr. Powell: I would refer my hon. Friend to the replies which my right hon. Friend gave to her and to my hon. Friend the Member for Sutton and Cheam (Mr. Sharples)on 2nd July.

Dame Irene Ward: Will my hon. Friend bear in mind that, since those Answers, the Prime Minister has made a speech in which he pointed out that this country was very good for most people, with which I concur? At the same time, may I ask him if he would do something for these people without whose help and thrift in days past this country would not exist to be good for the rest of the people?

Mr. Powell: In my right hon. Friend's Budget, a good deal has been done for the tax position of those on small fixed incomes.

Dame Irene Ward: asked the Chancellor of the Exchequer whether he will undertake to examine the position of those in the small range of incomes who were affected by the alteration in the band of income tax reliefs in the 1955 Budget, with a view to ameliorating their position while, at the same time, preserving the arrangements in respect of the higher income groups.

Mr. Powell: My right hon. Friend has noted my hon. Friend's suggestion.

Dame Irene Ward: Will my hon. Friend convey to his right hon. Friend the fact that I am looking forward to seeing him tomorrow morning and providing him with the facts and figures on which I hope he will act in his next Budget, and that I am starting in good time so that he cannot argue that he has not been told?

Oral Answers to Questions — CIVIL SERVICE

Information Officers

Mr. J. Harrison: asked the Chancellor of the Exchequer how many applications were received for the 98 appointments to the Information Officer Class of the Civil Service; how many applicants, not already in the Civil Service, have been interviewed; and how many applicants over the age of 45 years have been offered interviews for these appointments.

Mr. Powell: One thousand six hundred and seventy-three have applied; 127 not employed in the Civil Service have been offered interview, and 112 of these are over 45.

Mr. Harrison: Is the Minister aware that there is a general feeling amongst people qualified to apply for these posts that the advertisements which are usually posted when there is a vacancy are merely gestures, and that anyone outside the Civil Service proper has no chance whatsoever of obtaining one of these jobs?

Mr. Powell: I am glad to have an opportunity of stating that the Commissioners, in selecting candidates for interview, have no regard to whether a candidate is or is not at the moment a member of the Civil Service.

Oral Answers to Questions — HOUSE OF COMMONS PROCEDURE

Mr. Ellis Smith: asked the Prime Minister if he will move for the appointment of a Select Committee to consider the effect of the Monk resolutions, and thereafter to consider what alterations in the procedure of this House are desirable for the more efficient despatch of public business.

The Prime Minister (Mr. Harold Macmillan): No, Sir. I do not think that this would be appropriate.

Mr. Ellis Smith: So that Answer means that we do not mean business over inflation?

Oral Answers to Questions — NUCLEAR TESTS

Mr. Hector Hughes: asked the Prime Minister if he has yet considered the petition sent to him, signed by over 1,000 citizens of the City of Aberdeen, protesting against the testing of hydrogen and atomic bombs and calling for international agreement now to stop all tests of nuclear weapons; and what reply he intends to send to it.

The Prime Minister: I replied to the hon. and learned Gentleman on 20th July.

Mr. Hughes: While thanking the Prime Minister for that letter, may I ask him if he realises that neither that letter nor

his recent speech was an adequate reply to the fundamental and essential problem involved in this? Is he aware that he is missing an international opportunity by his procrastination, and will he realise that this is a very real world problem, and that we expect Britain to take the initiative?

The Prime Minister: If it is the wish on the hon. and learned Gentleman, I will, of course, circulate his letter and my reply in the OFFICIAL REPORT.

Following are the letters:

House of Commons,

London, S.W.1.

July 16, 1957.

Dear Prime Minister,

I enclose a number of protests against H-bomb tests. You will see that they are signed by some hundreds of residents in the City of Aberdeen.

I shall be glad if you will consider them and send me a letter in reply which I can send to the two of my constituents whose letters are annexed and who have sent me these extensively signed documents. With your reply please send all the documents back to me.

Yours sincerely,

(Sgd.)HECTOR HUGHES.

The Right Hon. The Prime Minister.

10, Downing Street,

Whitehall, S.W.1.

July 20, 1957.

Dear Hector Hughes,

Thank you for your letter of July 16, with which you sent me the enclosed petition from some of your constituents, calling for an international agreement to stop all tests of nuclear weapons. As you know, a suspension of tests forms part of the agreement we are trying to secure in the Disarmament Sub-Committee. Her Majesty's Government, together with the Governments of Canada, France and the United States, have put forward proposals according to which a suspension of nuclear tests would form part of a first stage disarmament agreement.

Your sincerely,

(Sgd.)HAROLD MACMILLAN.

Hector Hughes, Esq., Q.C., M.P.

Oral Answers to Questions — PRIME MINISTER (SECRETARY)

Mr. Hamilton: asked the Prime Minister how many unpaid secretaries are officially employed on work involving personal attendance on himself; and when was the latest appointment to such an office.

The Prime Minister: One, Sir; on 20th June last.

Mr. Hamilton: Is it not the case that these posts are normally held by civil servants, and is not this a reflection on the efficiency of the civil servants available for them? Can the Prime Minister give the name of the person who has been appointed, so that we may be able to form a more accurate judgment than we would otherwise be able to do?

The Prime Minister: Yes, Sir. There is no mystery about this. Mr. John Wyndham, who served with me as my private secretary for four years during the war, including the time when I was Resident Minister in the Central Mediterranean, undertook to help me whenever I wished, and I have taken advantage of that offer since. His formal position is that of a temporary civil servant, but this is a purely personal arrangement, for which there are indeed ample precedents in the past.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Pigs (Artificial Insemination)

Mr. de Freitas: asked the Minister of Agriculture, Fisheries and Food what he is doing to encourage artificial insemination in pig breeding.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): Further research on technical problems is still necessary before a commercial service of artificial insemination for pigs can be established. This research is being conducted by the Agricultural Research Council working in close association with four cattle A.I. centres which are operating pilot schemes. There is also experimental work at the centre operated by my Department at Reading. Provision to enable the Milk Marketing Board to undertake an A.I. service for pigs is included in the Agriculture Bill that is now before Parliament.

Mr. de Freitas: Is the Minister aware that the artificial insemination of cattle is a development which has had an enormous effect in improving cattle? Does he agree with that suggestion, and does he realise that pig breeders are very disappointed at the apparent lack of enthusiasm for a similar development for pigs?

Mr. Godber: I would agree entirely with the first part of the hon. Gentleman's supplementary question, but I would remind him that in respect of pigs there are technical difficulties that do not arise with cattle.

Food Exports

Mr. Willey: asked the Minister of Agriculture, Fisheries and Food, whether he will make a statement on the action he proposes to take to prevent the export of subsidised foodstuffs.

Mr. Godber: I would refer the hon. Member to the reply I gave about the export of eggs to my hon. Friend the Member for Newbury (Mr. Hurd)on 18th July. My right hon. Friend has no reason to believe that the export of other foods subject to the agricultural guarantee arrangements is causing or likely to cause serious prejudice to the interests of other countries.

Mr. Willey: As we have been embarrassed in the past by other imports of subsidised goods, does not the hon. Gentleman think that it would be better to prohibit these exports generally, rather than only for eggs?

Mr. Godber: No, Sir. I do not think that is really called for at present. Naturally, we consider any case that arises, and I think it would be better to leave it that way.

Slaughterhouses

Mr. Hayman: asked the Minister of Agriculture, Fisheries and Food when he proposes to lay before Parliament new regulations prescribing improved working conditions and welfare facilities for persons working in slaughterhouses.

Mr. Godber: My right hon. Friend has no authority at present to make such regulations but he proposes to seek power to do so in legislation giving effect to the Government's slaughterhouse policy to be introduced as soon as Parliamentary time permits.

Mr. Hayman: May I ask the Parliamentary Secretary whether that means next Session?

Mr. Godber: It means exactly what I said.

Mr. Willey: Does the Parliamentary Secretary realise that everyone interested


expects his legislation next Session, and that it has been delayed for far too long already?

Mr. Godber: I agree that there is every need for it. We shall seek to bring it in as soon as we can.

Mr. Hayman: asked the Minister of Agriculture, Fisheries and Food when he proposes to issue regulations prohibiting slaughtering on Sundays.

Mr. Godber: My hon. Friend intends to discuss this difficult question with the interests concerned.

Mr. Hayman: Will the Parliamentary Secretary bear in mind that it is extremely difficult now for meat inspectors to deal with animals slaughtered on Sundays and that a good deal of meat comes on to the market uninspected?

Mr. Godber: I realise that that problem has existed for some time, because this is prohibited by the Sunday Observance Act, 1627.

Agricultural and Land Drainage Machinery

Mr. Willey: asked the Minister of Agriculture, Fisheries and Food whether he will amalgamate the agricultural machinery operations and the land drainage operations.

Mr. Godber: Agricultural and land drainage machinery services now operate in a relatively small and diminishing number of counties. The organisation of those still in operation is under review and my right hon. Friend will see that the point mentioned by the hon. Member is considered. Already the supplies organisation for the two services is common and in most counties the repairs organisation also.

Copra and Coconut Oil (Bulk Purchase)

Sir L. Plummer: asked the Minister of Agriculture, Fisheries and Food what plans he has for the renewal of the Copra and Coconut Oil Bulk Purchase Agreement with the Pacific Dependencies, which is due to expire this year, with particular reference to the Gilbert and Ellice Islands whose economy so exclusively depends on copra prices.

Mr. Godber: There are nine contracts in force, only four of which concern

Territories for which the United Kingdom is responsible. They expire on 31st December, 1957, and, in accordance with the Government's policy of bringing State trading to an end. it is not intended to renew them.

Sir L. Plummer: Is the Minister aware that the Gilbert and Ellice Islands are utterly dependent for their economy on a stable price for their products? If he is to abolish bulk purchase, will he at the same time use his influence to see that the Colony does not suffer as a result of the change in the plans of the Government?

Mr. Godber: Yes. They have had very considerable notice of this and I understand that the representatives of the copra boards in these various Territories have been joining in discussions on matters of common interest in London recently. I hope they will lead to some result.

Mr. Willey: In view of the great concern expressed about this matter in the Colonies, will the hon. Gentleman assure the House that he and his right hon. Friends will keep an interest in these discussions at present taking place?

Mr. Godber: We will keep an eye on them, but, as we have decided to end State trading, we must keep our interest marginal.

Oral Answers to Questions — UGANDA

Education

Dr. King: asked the Secretary of State for the Colonies what financial assistance is given by Her Majesty's Government towards education in Uganda.

The Under-Secretary of State for the Colonies (Mr. John Profumo): In the current development period, 1955 to 1960, assistance of £1,460,000 is available from Central C.D. & W. funds towards capital expenditure at Makerere College, the University College of East Africa. The cost of primary and secondary education in Uganda is met entirely from local sources.

Dr. King: Is the Minister aware that his Answer shows that the bulk of the cost of education in Uganda is met by poor people without capital resources to lay by for education and that parents are living on subsistence incomes and making


terrible sacrifices to contribute to the education of their children? If we believe in the Commonwealth, is it not our duty to do more for them?

Mr. Profumo: It is open to Uganda to apply for such assistance from the uncommitted balance of its territorial Colonial Development and Welfare allocation.

Dr. King: asked the Secretary of State for the Colonies the number of children attending primary school in Uganda this year, the number of children of primary school age not attending school and the number of children who left primary school without completing the four-year course last year.

Mr. Profumo: No figures are yet available for 1957, but at the end of 1956, 399,612 children were attending primary school in Uganda and approximately 250,000 children of primary school age were not attending school. I regret that information on the number of children who left primary school last year without completing the four-year course is not readily available.

Dr. King: Is the Minister aware that even the inadequate information which he has given the House shows that, while much has been achieved in Uganda, there is a tremendous amount to be done before the children of Uganda will have anything like the opportunity, even of primary education, that other children have? Will he take that as part of his work to help the people of Uganda?

Mr. Profumo: I can assure the hon. Member that we fully appreciate the point he has made and that every effort is being made to increase the educational possibilities.

Dr. King: asked the Secretary of State for the Colonies the number of Uganda students at present in British universities, the number of these financed by the Uganda Government, and the number financed by Her Majesty's Government.

Mr. Profumo: Eighty Uganda students were studying at universities in the United Kingdom during the past academic year. Of these 48 were financed by the Uganda Government or local authorities and two by Her Majesty's

Government from Colonial Development and Welfare funds.

Dr. King: Would the Minister agree that the figures he has given show that Uganda is making a tremendous effort to provide some of its own children with university education? Would not he use his influence with universities in this country to give some free places to promising young African students?

Mr. Profumo: That is a matter I should have to consider, and I will.

Oral Answers to Questions — NIGERIA

Malnutrition

Mr. Rankin: asked the Secretary of State for the Colonies, in view of the fact that the occurrence of malnutrition in Nigeria has been definitely established, what steps he is taking to eradicate it.

Mr. Profumo: This is a matter for the Nigerian Governments. They have established a Federal Nutrition Unit, and regional nutrition committees to carry out field and laboratory investigations. Plans for increased staff have been drawn up to enable all food analysis to be done locally in future.
Dietary and clinical research is being undertaken at Ibadan and elsewhere and, following consultations with experts from F.A.O. and W.H.O. further intensive research is planned. Agricultural staff are co-operating fully in the work.
The public are being taught, by Press articles and radio talks and by adult education classes, how best to select food and prepare it. Advice is also given by my Department and by the Applied Nutrition Unit in London in helping to combat this serious problem.

Oral Answers to Questions — ST. KITTS

Malnutrition

Mr. Rankin: asked the Secretary of State for the Colonies what steps are being taken to develop agriculture and other food sources in St. Kitts, Nevis and Anguilla in order to combat malnutrition in St. Kitts Presidency.

Mr. Profumo: The Colony's development plan for 1955–1959 includes projects for the improved production of livestock and food crops.

Mr. Rankin: May I thank the hon. Gentleman for the replies he has given to this Question and to the one about Nigeria and urge him to prosecute his good work with even more fervour than he is now showing?

Mr. Profumo: Not with greater fervour, but with equal fervour.

Oral Answers to Questions — MALTA

Talks

Mr. Teeling: asked the Secretary of State for the Colonies whether he will make a statement on his latest conversations with the Prime Minister of Malta.

Major Wall: asked the Secretary of State for the Colonies whether he can now make a statement about his talks with the Prime Minister of Malta.

Mr. Profumo: Considerable progress has been made in talks between the Maltese Government and Her Majesty's Government. They have agreed to continue discussions in September with a view to completing detailed plans for integration.
There have also been discussions on discharges from Services' employment during the current year. Her Majesty's Government have reluctantly come to the conclusion that the Services cannot avoid certain dismissals now, although one or two schemes have been found for new work and the Services will do all they can to find new avenues of employment for some of the discharged personnel. The Maltese Government have secured the release of certain funds due to them which they will use up to the end of the year to provide work for those out of employment. Both Her Majesty's Government and the Maltese Government will collaborate as closely as possible on this problem in order that undue hardship in Malta may be avoided.
Final decisions have not yet been reached on long-term defence plans in relation to Malta and it has been agreed that before any final decisions are taken there will be discussions between the two Governments.

Mr. Teeling: Has my hon. Friend seen a report of a speech made yesterday by Dr. Borg Olivier, Leader of the Opposi-

tion in Malta, in which he said that the terribly long-drawn-out negotiations over integration are really hurting the unity of Malta in regard to the problem of unemployment, which my hon. Friend has just mentioned? Can he say something in more detail about the integration question before the House rises?

Mr. Profumo: No, Sir, but I hope that the statement I have made will be encouraging to all concerned.

Mr. J. Griffiths: In considering the effects on Malta of our defence cuts, will the hon. Gentleman bear in mind the contribution Malta has made to the defence of this island and be very generous to Malta? Will he appreciate that hon. Members on both sides of the House who were privileged to take part in the Round Table Conference will expect and hope that Her Majesty's Government will be equally generous in this matter?

Mr. Profumo: I fully appreciate the viewpoint of the right hon. Member. I do not think I can give any undertaking, but I hope he will take it from me that all these matters are being, and will continue to be, looked at in a very sympathetic manner.

Oral Answers to Questions — BRITISH GUIANA

Cotton Growing Experiments

Mr. Tilney: asked the Secretary of State for the Colonies whether he is aware of the good reports from Lancashire on cotton grown experimentally in British Guiana; and what steps have been taken by the Government of British Guiana to find out if cotton can be grown in that territory on an economic and commercial basis.

Mr. Profumo: I am aware that favourable reports have been received, but further experimental work on the economics of cotton growing in the Colony is necessary before any decision to expand production can be made. Such work is being done by the Department of Agriculture.

Mr. Tilney: Is my hon. Friend aware that I am told that this cotton compares very favourably with that from Egypt?

Oral Answers to Questions — KENYA

Central Nyanza (Communal Services)

Mr. Sorensen: asked the Secretary of State for the Colonies on whose authority the District Commissioner for the Central Nyanza district of Kenya requires 24 days' work per year from members of the Banyala tribe; what payment they receive; and what are their conditions of work.

Mr. Profumo: Section 22 of the African District Councils Ordinance, 1950, empowers African District Councils to make by-laws requiring able-bodied adult male Africans to work for not more than six days in any quarter on minor communal services, which are performed in the direct interest of the community concerned and are considered to be a normal civic obligation. I am asking the Acting Governor for the answer to the second and third parts of the Question and will write to the hon. Member.

Oral Answers to Questions — BRUNEI

Development and Constitution

Mr. Sorensen: asked the Secretary of State for the Colonies what progress has been made in the implementation of the Brunei Five-Year Development Plan; what proposals for a revised constitution or for Federation are now being considered; and what political parties have been registered in this territory.

Mr. Profumo: Satisfactory progress is being made in carrying out the five-year development plan. Individual schemes estimated to cost 94·3 million dollars have been approved and a total of 66·5 million dollars will have been spent by the end of 1957.
As regards the second part of the Question the Sultan of Brunei has announced his intention to broaden the basis of his Government by the inclusion of unofficial members in the State Council. Proposals for a written constitution to give effect to this intention are under consideration. No proposals for federation are under consideration at the present time.
One political party, the "Party Ra'ayat", has been registered under the Societies Enactment.

Mr. Sorensen: May I ask the hon. Member whether any other parties have applied and have not been registered, precisely what registration means and on what basis these parties can register?

Mr. Profumo: If the hon. Member would like more details, I should prefer to see the Questions on the Order Paper.

PROVINCIAL BUS AND LONDON FOOD MARKETS DISPUTES

The following Questions stood upon the Order Paper:

Lieut.-Colonel BROMLEY-DAVENPORT: To ask the Secretary of State for the Home Department if he is aware that the use of violent and unlawful methods of picketing in the present provincial bus strike is threatening a general breakdown of law and order; and what action is being taken to restore peaceful conditions.

Sir LANCELOT JOYNSON-HICKS: To ask the Secretary of State for the Home Department whether he is aware that the failure of the police throughout the country to prevent the interruption of public transport services this week by unlawful violence has created the danger of a general breakdown of law and order; and what steps he is taking, in the interest of national security, to protect the interests of people who wish to use these services upon their lawful occasions.

Mr. BIDGOOD: To ask the Secretary of State for the Home Department if he is aware that violent assaults on travellers on omnibuses and motor coaches by those who claim to be engaged in peaceful picketing during the present provincial omnibus strike threaten to lead to a general breakdown of law and order; and what action the Government are taking to restore peaceful conditions.

The Prime Minister: With your permission, Mr. Speaker, and in the absence of my right hon. Friend the Home Secretary, who is in attendance on Her Majesty, I will answer these Questions together.
There have been Press reports of the unlawful use of force by strikers in connection with the provincial bus dispute


and in the London food markets. I would like to say, first, that I am sure that the violence which has been the work of a small minority of the strikers will be condemned by trade unionists generally.
The law allows peaceful picketing for the purpose of communicating information or persuading any person to work or abstain from working, but intimidation in any shape or form is unlawful. It is the duty of the police to enforce the law, and the responsibility in any area rests with the chief officer of police concerned.
My right hon. Friend has received reports from these officers and is confident that the police in all parts of the country are well aware of their duty and will fulfil it. I must make it clear that the Government are determined to see that law and order are maintained.

Mr. Gaitskell: Is the right hon. Gentleman aware that all of us deplore the use of violence in any trade dispute? There is no question whatever about that. Is he further aware that it will give general satisfaction that he underlined that these acts of violence are the work of a small, indeed a tiny, minority out of the 100,000 men who are on strike in these disputes? I think it is also fair to remind the House that trade union leaders, on a number of occasions recently, have equally condemned the use of violence.

The Prime Minister: I agree with what the right hon. Gentleman has said. I think that a clear expression of disapproval from all those who have authority, and to whose leadership these men look, is of great value. I hope that there will be no misunderstanding about this matter.

Mr. H. Fraser: In the same sense that assistance has been given to motorists who carry persons otherwise prevented from travelling, would my right hon. Friend consider extending insurance cover to those private bus companies still operating buses in the Stafford and Stone area against hooliganism, which has been organised, and the hiring of thugs to beat up buses? Would my right hon. Friend consider covering these buses which operate against this form of intimidation and covering them against riots and civil disturbance?

The Prime Minister: As I understand, the question is whether some form of insurance or cover can be given to protect buses or owners of buses in these cases. I will consider that.

Mr. Robens: Did the Prime Minister fully hear what his hon. Friend the Member for Stafford and Stone (Mr. H. Fraser)said? May I repeat it? He said that there was organised hooliganism and the hiring of thugs. If that is the case, would the Prime Minister seek from his hon. Friend the fullest details and pass them to the police so that prosecutions may take place, that these charges may be heard in the courts, that the proper evidence may be brought forward and that we may see precisely on which side truth lies?
Does the right hon. Gentleman not know that not only have the trade union leaders engaged in the disputes indicated orally to their other officials that they must not engage in anything but peaceful picketing, but that written instructions to that effect have also been sent out? Is the Prime Minister aware that although 4,000 market porters and others are on strike at Covent Garden today, there have been 30 charges laid arising out of 12 incidents? If the suggestion is that there is hooliganism which the police are not controlling, that appears to be a reflection on the police services and not on the trade unions or the men.

The Prime Minister: We must try to keep a sense of balance on both sides. There have been some very unfortunate cases. I saw, for instance, that one official said that there was over-enthusiasm. To hit a man in the stomach with a crowbar is more than over-enthusiasm. There have been some very unfortunate cases, but it would be quite wrong to represent them as in any way general.
What we must try to do, what I know the police will try to do and what I hope hon. Members on all sides of the House who have influence will try to do, is to keep these cases to an absolute minimum through any influence which they can use.

Sir H. Butcher: Is my right hon. Friend aware that cars carrying persons are now proceeding into Hertfordshire to block the main roads to prevent food lorries from being driven to London and to


intimidate the drivers? Will he ask the county constabulary to be specially alert to that kind of practice?

The Prime Minister: I understand that the constabulary have been alerted about this matter.

Mr. Shinwell: While in no way condoning outbreaks of violence in industrial disputes, although I have seen many in my time and shared in many, for which I shall not apologise, may I ask the right hon. Gentleman whether he is not aware that a measure of responsibility rests upon the shoulders of the proprietors of the private bus companies, in view of the shocking wages paid to the bus drivers and the miserable offer of 3s. a week increase? Is it altogether surprising that some men lose their tempers in a situation of that kind?
Is the right hon. Gentleman aware of that, and would it not show more wisdom on the part of the right hon. Gentleman's colleagues in the Government if, instead of becoming hysterical about this affair, they did something to bring a little more comfort and contentment to these bus drivers and conductors?

The Prime Minister: I quite understand the right hon. Gentleman's interest in these matters, but I thought that we all felt nowadays that whatever might be the subject matter of the dispute, or the rights and wrongs of each side—and I would remind the House that this dispute is now before the Industrial Tribunal—we ought to try to do our best to see that disputes are carried on peacefully and in accordance with the law.

Captain Waterhouse: Is it not the case that in the Covent Garden dispute the matter has already been to arbitration and that it is a strike against an arbitration award? Does not my right hon. Friend agree that although everybody has the right to picket and to go on strike, people also have the right to work if they wish to do so?

The Prime Minister: Yes, Sir. I do not think that the arguments on either side are relevant to what we are discussing and I did not wish to go into those questions. What I hope the whole House will support is that there should not be this kind of incident, which is quite

contrary to the whole character of our people and quite inappropriate to modern conditions.

Mr. Bellenger: The Prime Minister has referred to the Tribunal which is investigating this strike. Can he say when the Tribunal will report?

The Prime Minister: No, Sir. I referred to it only so as not to be drawn into any question on the merits of the case, for I was dealing only with the question of law and order.

Mr. Maude: Is the Prime Minister aware that some disquiet has been caused by the fact that certain police forces have attempted to discharge their duty of preventing breaches of peace by advising citizens to yield to threats of illegal force, and that that is not considered, on the whole, to be a real triumph for law and order?

The Prime Minister: I have no information of that kind. I believe it to be ill founded. If my hon. Friend can give me any such information I will, of course, have it most carefully inquired into.

Mr. Grimond: While welcoming what the Prime Minister said about the subject of intimidation and appreciating that, for the transport strike anyhow, a Tribunal is sitting, may I ask the right hon. Gentleman whether, in view of the great public anxiety over these strikes, he will give an assurance that a statement will be made to the House if they are not settled by the weekend?

The Prime Minister: I will consult my right hon. Friend the Minister of Labour about that matter.

Mr. Mellish: Is the Prime Minister aware that undue publicity has been given to these incidents—[HON. MEMBERS: "Undue?"]—and that some of the better incidents in this dispute have been given no publicity at all? For example, is the right hon. Gentleman aware that at Covent Garden adequate representations have been made to ensure that hospitals, and so on, will be supplied? Again, is the right hon. Gentleman aware that in the provinces a vehicle was stopped by pickets but that when it was found that it was required for handicapped children the men actually drove it and


made sure it got through, loaded it themselves, and make quite certain that essential services would be maintained in that way?
Will the right hon. Gentleman not concede that the Press, almost from the beginning of the strike, have been determined to do what they can to misrepresent the point of view of the men, and have done great disservice by trying to present the trade unions in a bad light and do all the harm they can?

The Prime Minister: I read the Press fairly widely, and the incidents to which the right hon. Gentleman referred I had read in the newspapers. The point remains that whatever may be the rights and wrongs of the dispute, the rights of the public and the rights laid down by law must be maintained. Peaceful picketing has been defined. There is a long history behind it. If it is misused, it is the duty of those in authority to see that that misuse is discontinued. That is all I am pleading for, and I believe that the whole House is on that side.

CENTRAL OMAN (SITUATION)

Mr. Bevan: (by Private Notice)asked the Secretary of State for Foreign Affairs whether he has any further statement to make on the situation in Oman.

The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): I informed the House on 23rd July that discretion had been given to our local military authorities to take certain limited action. Since then, after warning, air action has been taken against military targets.

Mr. Emrys Hughes: More violence.

Mr. Lloyd: As I promised on 23rd July. I will keep the House informed about developments. I would remind the House that these are limited operations, but the necessary forces are being placed at the disposal of the local military commanders as they are required.
I should also like to warn the House against giving any credence to the false and misleading information which is being disseminated from Cairo.

Mr. Bevan: Is the right hon. and learned Gentleman aware that his information is now exceedingly meagre? All we are told about this

affair is that there has been some insurrection inside this State and that we have been asked to intervene on behalf of the Sultan and that because he is an old friend of 150 years' standing—not this particular one—we have considered it an obligation on our part to intervene.
We have not been told, however, about the merits. We have not been told why the Imam of Oman is in insurrection. We have a vague statement from the right hon. and learned Gentleman that arms are being sent to the Imam from outside, and that the right hon. and learned Gentleman is determined to stop them, although he does not know where they are coming from. We have been informed, after reference to the Encyclopaedia Britannica, that the temperature there at this time of the year is 120 degrees.
We have been told that the right hon. and learned Gentleman has decided to put his foot down with a firm hand, although the ground is so hot he cannot use ground forces. Now we are letting bombs loose in order to displace innocent rock and sand from one place to another and to destroy mud walls.
So far, we have had no further information than that the Sultan is an ancient friend, that he is in trouble, that we are going to his rescue. Is this an attempt to preserve ancient monuments or is it a really serious effort?

Mr. Benn: Is the Foreign Secretary yet in a position to explain to the House what is the position of British forces in action in Oman, whether, if any pilots are shot down, or any British troops likely to be sent in are captured, they will be regarded as prisoners of war under international law? Secondly, I should like to ask the right hon. and learned Gentleman when he proposes to make available information that I sought in a Question three weeks ago, asking which treaties were applicable in this area. In response to that. I got a note from the Foreign Office saying that there are so many pages of small print in the treaties that the Foreign Office could not give me an answer.
Would the right hon. and learned Gentleman tell the House whether the Treaty of Sib is, in his view, still in operation, under which the Imam of Oman, in agreement with the Sultan, was


given complete autonomy in his own area?

Mr. Lloyd: I repeat what I have said before, that British troops will be acting in the armed service of the Crown. At the moment, no casualties have been reported. The troops will be carrying out their duties.
I made it perfectly clear on a previous occasion that we were not taking this action in response to a specific treaty obligation. There is no specific treaty obligation that we should intervene in the internal affairs of Oman. On the other hand, I cited more than one precedent to show how we had, in the past, acted at the invitation of a friendly ruler to help him in preserving law and order in his own domains. That is what we are doing now.

Mr. Biggs-Davison: My right hon. and learned Friend mentioned propaganda being disseminated from Cairo. Can he say whether radio propaganda is being broadcast from Dhahran, in Saudi Arabia, against our allies and this country, and, if so, who is responsible for it?

Mr. Lloyd: If my hon. Friend will give me particulars about that, I will certainly look into the matter.

Mr. Bevan: Is the right hon. and learned Gentleman aware that there has been some confusion in the public statements about this, about officers of the British Army operating as officers of the Sultan's army, as though they were operating under the orders of the British Government? It should be made clear.
Is the right hon. and learned Gentleman further aware that, despite the fact that we have not tried to blow this thing up too much, we shall want to have a serious statement about it at the beginning of next week, because it is no use having innuendoes about outside Powers interfering unless we have some precise information about who they are, so that we can try to bring about peace by influencing those outside Powers not to misbehave themselves? Therefore, we should like a full statement at the beginning of next week about the position.

Mr. Lloyd: I am grateful that the Opposition do not wish to blow this matter up, and I am grateful for the right hon. Gentleman's observation that he

wishes to have a serious statement on the matter. As I have said before, we shall give the House full information about development. I said the other day that we wished to restrict the area of uncertainty and tension. I believe that is also the wish of our American allies. We shall certainly do everything we can. Meanwhile, I will give the House all the information I can about developments.

Mr. J. Hynd: The Foreign Secretary has said that there have been no casualties on the R.A.F. side. Can the right hon. and learned Gentleman say whether he knows how many casualties there have been on the other side—the objects of the bombing—or does he not care?

Mr. Lloyd: That is a wholly unfair insinuation. To begin with, no bombing has taken place. [HON. MEMBERS: "Rockets."] The hon. Member talked about bombing. No bombing has taken place and, as far as we know there have been no casualties, either.

Hon. Members: Withdraw.

Mr. C. Pannell: Is the Foreign Secretary trying to assure the House that all that has taken place up to now does not go further than peaceful picketing?

Mr. S. Silverman: Whilst I am grateful to the right hon. and learned Gentleman for his promise to keep the House informed fully of developments at an early date, may I ask whether he will bear in mind that the House and the country would like to know something about the merits of the dispute as well as about the developments? If we are intervening, and feel ourselves entitled to intervene and to use the armed forces of Her Majesty to do so, surely we are entitled to be told what the row is about and what the merits are.

Mr. Lloyd: The question is the maintenance of the authority of someone who is the legitimate sovereign of these areas—[HON. MEMBERS: "Oh:]—someone whose sovereignty was universally acknowledged as recently as 1955, and before that. As I have said, Her Majesty's Government intend to do their duty by someone who has been a firm friend of this country and whose sovereignty is acknowledged.

Mr. Bevan: That is really not treating the House fairly- It is quite true that the


right hon. and learned Gentleman has said that we are intervening because we want to support an old friend against someone who was giving him trouble. We are not entitled to use the lives of British Service men merely for such a purpose.

Captain Pilkington: Do all these remarks mean that the Opposition would not help their friends?

Mr. Bevan: Unless hon. Members opposite are careful, we shall give them a few black eyes over this before we are finished.

Captain Pilkington: On a point of order. Is it in order for the right hon. Member for Ebbw Vale (Mr. Bevan)to threaten hon. Members on this side of the House with black eyes? Should he not withdraw his remark or apologise, Mr. Speaker?

Mr. Speaker: I did not rebuke the right hon. Member for Ebbw Vale (Mr. Bevan)because I understood that the black eyes to which he was referring were metaphorical.

Mr. Bevan: It is quite obvious that the sense of humour of some hon. Members opposite has gone out with their sense.
Is it the general principle of Her Majesty's Government that armed forces of the Crown are used whenever old friends ask us to intervene? There must be some other reasons for intervention, and we should like to know what they are. I have asked the Foreign Secretary whether he would be good enough to prepare for us a statement next week showing all the circumstances of our intervention and what are the relations between the Imam of Oman and the Sultan, so that we may judge of the merits of the case, because we cannot sit silent whilst British lives are put in jeopardy over what, up to now, amounts merely to a statement of sentimentality.

Mr. Lloyd: As to the reasons for the action, or the reasoning behind it, I do not think that it is probably very different from the reasoning behind the action of the Labour Government in 1930, when there was a very comparable situation.
As for the wider aspect, the right hon. Gentleman should realise that we have certain relationships in the Gulf which are of paramount importance to this

country. We have certain obligations to certain people, certain treaties of friendship, and also certain relationships. I should have thought that hon. and right hon. Members on all sides of the House would realise how much our influence and our interests would suffer if it were thought that we do not stand by our friends.

Mr. Shinwell: Will the right hon. and learned Gentleman be frank with hon. Members and answer this question? Has our action anything to do at all with the matter of our oil interests in the Middle East? Can he say whether our oil interests are in jeopardy? If that is the position, obviously we have to give that matter very careful consideration in the interests of our economy. is that the reason? Can the right hon. and learned Gentleman say?

Mr. Lloyd: I will certainly not say that our oil interests are directly in jeopardy, but I should have thought that the right hon. Gentleman, from the responsible offices that he has held, would have known the importance to the country of our position in the Gulf.

BUSINESS OF THE HOUSE

Mr. Gaitskell: May I ask the Prime Minister whether he will state the business for next week?

The Prime Minister (Mr. Harold Macmillan): Yes, Sir. The business for next week will be as follows:

MONDAY, 29TH JULY—Consideration of the Motion standing in the name of the hon. Member for Bristol, South-East (Mr Benn)relating to the action of Mr Speaker on 22nd July.

After this Motion has been disposed of we shall begin the debate on Local Government, which will take place on a Government Motion to take note of the White Papers.

Then we shall consider the Motions to approve the Town and Country Planning (Minerals)(Amendment)Regulations, and similar Regulations for Scotland; and the Housing (Payments for Well-Maintained Houses)(Scotland)Order.

TUESDAY, 30TH JULY—Second Reading of the Consolidated Fund (Appropriation)Bill, which it is proposed to take formally.

Conclusion of the debate on Local Government.

Committee and remaining stages of the Governors' Pensions Bill [Lords], which is a consolidation Measure.

WEDNESDAY, 31ST JULY—Committee and remaining stages of the Consolidated Fund (Appropriation)Bill.

Debate on Redundancy at Royal Ordnance Factories, until 7 o'clock.

Afterwards, there will be an opportunity for matters to be raised by private Members.

THURSDAY, 1ST AUGUST—A Debate will take place on an Opposition Motion on Retirement Pensions, until about 8 o'clock.

Then there will be an opportunity to discuss the question of the Attorney-General's Fiat, about which the hon. Member for Nelson and Colne (Mr. S. Silverman)has tabled a Motion.

If all necessary business is disposed of it is hoped to adjourn for the Summer Recess on Friday, 2nd August. until Tuesday, 29th October.

It may be convenient for me to inform the House that it is expected that Prorogation will take place on Friday, 1st November, and that the new Session will be opened on Tuesday, 5th November.

I would remind the House that power already exists for Mr. Speaker, upon representations being made by the Government, to call the House together at an earlier date if such a course should be necessary in the public interest.

Mr. Gaitskell: Presumably, we shall be able to debate the Motion for the Summer Recess and, therefore, at this stage, I make no further comment on what the Prime Minister has said on that subject.
I would ask the right hon. Gentleman whether the Government will suspend the Standing Order for an hour on Monday so that there may be no interference with the debate on local government, from the earlier Motion on the action of Mr. Speaker.

[That this House is of the opinion that the statement made by the Secretary of State for Foreign Affairs on 22nd July, in which he announced that the British authorities in Muscat and Oman had

been given discretion, within certain limits, to take military action, constituted a definite matter of urgent public importance under Standing Order No. 9, and regrets that Mr. Speaker did not rule to that effect.]

Is the right hon. Gentleman aware that we on this side of the House have decided to set aside, out of Opposition time, the remaining part of Wednesday for private Members, in accordance with precedent and, similarly, we have decided to set aside the last two hours on Thursday for the Motion tabled by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman)?

[That this House deeply deplores the refusal of Mr. Attorney-General to grant his fiat to enable John Willson Vickers to appeal against his conviction to the House of Lords, so as to establish on the highest judicial authority whether or not Section 1 of the Homicide Act effectively abolishes the doctrine of constructive malice and prevents a man from being liable to be convicted of murder who had no intention either to kill or to do grievous bodily harm, as the Government assured the House was its purpose during the debates on the Homicide Act.]

The Prime Minister: I am grateful to the right hon. Gentleman. It would be very reasonable, if the Motion on Monday relating to Mr. Speaker's action is pressed, that another hour should be given to the rest of the debate. Perhaps an hour's suspension would be the right amount, so as not to curtail too much the debate on local government.

Sir T. Moore: I may have misheard my right hon. Friend. Could he say which White Paper is to be taken note of on Monday?

The Prime Minister: I think that the plan is to take all the four White Papers as the subject of the debate. It may perhaps be found convenient if the earlier part of Tuesday's debate were devoted more particularly to the Scottish aspect of the question.

Mr. Wigg: If a debate should develop on Wednesday on the two White Papers which the Government published yesterday, would the right hon. Gentleman make arrangements for a Government spokesman to reply?

The Prime Minister: Oh, yes, Sir.

Mr. J. Eden: Could my right hon. Friend say whether, before the House rises for the Summer Recess, we shall have an opportunity of hearing a further statement on the developments in Cyprus?

The Prime Minister: No, Sir. I do not think that there is any occasion for a further statement after those made in the debate we had a few days ago.

Mr. Patrick Maitland: Will my right hon. Friend bear in mind that there are again rumours in the Press about Cyprus, that these cause anxiety, and that in view of the inconclusive nature of our debate the other day it is desirable for us to have a statement before the House rises?

The Prime Minister: I read the Press and I observe a large number of rumours on a large number of subjects. I do not wish to make myself unduly unpopular with the Press, but I notice that nearly all of them are incorrect.

Mr. George Craddock: May I ask the Prime Minister, in connection with busines tomorrow, whether he will be good enough to give a guarantee that the National Assistance Act, 1948 (Amendment)Bill will have the consideration of the House, because it is a very important Measure for old-age pensioners who use the "meals-on-wheels" service? When the Bill came before the House on Second Reading it had the support of hon. Members on all sides, so will he please give a guarantee that it will have further consideration and will. I hope, go through on the nod tomorrow?

The Prime Minister: I will look into that point. As I understand, this was a Private Member's Bill, and the last Private Member's day has passed. Therefore, I cannot give an undertaking, but I will consider what the hon. Gentleman has said.

JOINT UNDER-SECRETARY OF STATE FOR SCOTLAND

The Prime Minister (Mr. Harold Macmillan): With permission, Sir, I will now make a short statement.
I have made inquiries into the matter affecting my hon. Friend the Joint Parliamentary Under-Secretary of State for Scotland, the Member for Dumfries (Mr. N. Macpherson), which was referred

to in the Question asked by the hon. Gentleman the Member for Hamilton (Mr. T. Fraser)on 23rd July.
I understand that my hon. Friend was invited by the Directors of the Dumfries and Galloway Standard to consult with them about the conduct of the paper; that he accepted this invitation, and that in November last year he took part in a meeting between the directors and the editor at which the future policy of the paper was discussed. Six months later, the directors replaced the editor.
In this matter, my hon. Friend was involved solely as the Member for the constituency. The fact that an hon. Member holds Ministerial office does not inhibit him from dealing with matters affecting his constituency with the same freedom as a private Member so long as there is no conflict between what he does as a Member and his duties and responsibilities as a Minister.
I therefore do not consider that my hon. Friend took any action in this matter which was inconsistent with his tenure of office as a Minister, or which could not properly have been taken by any hon. Member asked by his constituents to advise and assist in dealing with a problem which was causing them concern.

Mr. Gaitskell: Is the Prime Minister aware that this distinction between the Joint Under-Secretary in his capacity as Under-Secretary and his position as a Member of Parliament seems to us to be one that is difficult to sustain? Presumably, if the hon. Gentleman goes to his constituency and makes a speech, he does not at that point cease from being a member of the Government. When he went to the directors' meeting to influence their views, did he cease to be a member of the Government as soon as he got into the room?
Is the Prime Minister further aware that Mr. Williamson, who was dismissed—which was a serious matter for him—said that the hon. Gentleman had complained to the directors of the paper several times, asking why so much attention was given to Liberalism instead of to National Liberalism? Was it not very unreasonable to ask the editor to devote more space to National Liberalism, since none of us knows what it is?
Is the right hon. Gentleman further aware that the editor went on to say


that the hon. Gentleman attended a meeting of the directors of the paper on 20th November last year and also says:
… I was asked to leave the room. When I returned I was told that the paper would support Major Macpherson and the Government. I asked whether it was a Liberal paper and was told yes, and then said that if it was a proper Liberal paper it could not give full support to either the M.P. or the Government.
Does not all this show that, in fact, the hon. Gentleman still retained his membership of the Government when he was in the directors' room, and was not his conduct in consequence thoroughly improper?

The Prime Minister: I understand that the paper in question has a somewhat restricted circulation. Therefore, I think it can be described as a constituency rather than as a national matter. I will put this consideration before the right hon. Gentleman—of course, it might occur to him. If by any chance he or his party were ever in office, and the leader writer of the Daily Herald suddenly began to write Tory leading articles, I have no doubt that he would interest himself.

Mr. T. Fraser: I wonder whether the Prime Minister would make some further inquiries? I know that he has not had much time since Tuesday. Would he find out whether the Joint Under-Secretary approached the editor of this paper many times over a long period, and put pressure on the editor to change his editorial policy? The complaint of the Joint Under-Secretary of State was that this editor was writing editorials criticising the policy of Her Majesty's Government. [An HON. MEMBER: "Not the local Member."] Not the local Member, but the Government's policy.
Would the Prime Minister inquire whether the Joint Under-Secretary himself took the initiative in meeting the directors prior to the meeting on 20th November? Would he inquire why it was necessary for the Joint Under-Secretary to have his meeting with the directors after the managing editor had been asked to leave the room? Would he further inquire whether there is truth in the suspicion which is current in Dumfriesshire that not only did the Joint Under-Secretary play such an ignoble part in getting the sack for the ex-editor but in recruiting his successor?
If the Joint Under-Secretary can divest himself of his Ministerial responsibility and become a Member of Parliament for a matter concerning a newspaper which certainly is beyond his constituency, what is to prevent the right hon. Gentleman the Prime Minister from ceasing to be Prime Minister, becoming a Member of Parliament again, and having similar meetings with editors and directors of all the national newspapers?

The Prime Minister: I did my best, as I was asked to do last Tuesday, to make an inquiry into this matter. I have made a statement, to which I have nothing to add. I still do not think that there was anything my hon. Friend did as a Minister which would make me lose confidence in him as one of my Ministerial colleagues, and, on reflection, I think that the House will be inclined to take the same view.

Mr. Grimond: There does not seem to be any dispute that pressure was brought upon this paper by a member of the Government. But I imagine that the Prime Minister will not want to go on record as saying that it does not matter because it is a small paper, or even because it is a Liberal paper. As for his analogy of the Daily Herald, surely, if the right hon. Gentleman went to see the leader writer of the Daily Herald and asked him to stop writing Socialist leading articles, it would be highly improper? That is the parallel with this case. I am sure that the Prime Minister will agree that it is improper that a member of the Government should seek to influence a paper in this way.

The Prime Minister: I have nothing to add. The reason why I mentioned the character of the paper was merely to show that its circulation was low and that this was a constituency matter. Let me put it this way: that it is not what one would call a paper with a wide national circulation.

Mr. H. Morrison: Is not the Prime Minister getting this matter out of proportion—in the wrong direction? Is it not a fact that a Member of Parliament, who was also an Under-Secretary of State, saw the directors—whether by their invitation, or as a result of pressure from himself which may have led to the invitation is not quite certain—challenged


the policy of the paper, and evidently used persuasion to get it changed, the editor, incidentally, being dismissed?
Should not someone with a complaint against the policy of the paper write to the editor a letter of complaint for publication? Is it not unreasonable, especially if he is a Minister of the Crown, that he should have an interview with the board of directors, who have power of life and death, journalistically speaking, over the editor? Does not the Prime Minister see that this was a case of interference with the proper liberty of the Press?

The Prime Minister: I have nothing to add to what I have said. I think that the House, on reflection, will regard the action I have taken in this matter as the correct one.

Mr. Gaitskell: Is the right hon. Gentleman aware that, although he is not prepared to take any further action, the House will judge this as an improper interference with the freedom of the Press by a Minister and will still expect the hon. Member to take the appropriate action?

Mr. Hamilton: On a point of order. As we on this side of the House regard this as an extremely important matter, will you, Mr. Speaker, consider giving an opportunity to the Under-Secretary himself to make a full statement about his side of it?

Mr. Speaker: I have not had a request to that effect. We have a very important debate about to begin, with limited time. We cannot debate the matter now.

BUSINESS OF THE HOUSE

Ordered,
That this day Business other than the Business of Supply may be taken before Ten o'clock; and that if the first Resolution reported from the Committee of Supply of 24th July shall have been agreed to before half-past Nine o'clock, Mr. Speaker shall proceed to put forthwith the Questions which he is directed to put at half-past Nine o'clock by paragraph (7)of Standing Order No. 16 (Business of Supply).—[The Prime Minister.]

Proceedings on the Consideration of the Lords Amendments to the Agriculture Bill exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. P. Thorneycroft.]

Orders of the Day — SUPPLY

[26TH ALLOTTED DAY]

REPORT [25th July]

CIVIL ESTIMATES AND ESTIMATES FOR REVENUE DEPARTMENTS AND SUPPLEMENTARY ESTIMATES, 1957–58; MINISTRY OF DEFENCE, NAVY, ARMY AND AIR ESTIMATES, 1957–58

Resolutions reported,

Orders of the Day — CIVIL ESTIMATES, 1957–58

CLASS I

VOTE 4. TREASURY AND SUBORDINATE DEPARTMENTS

1. That a sum, not exceeding £2,051,292, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for the salaries and other expenses in the Department of Her Majesty's Treasury and subordinate departments, the additional salary payable to the Chancellor of the Duchy of Lancaster. and the salaries and other expenses of his office arising from his responsibility for the co-ordination of official information, and the salary and expenses of the Minister without Portfolio.

2. That a sum, not exceeding £42,754,850, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on 31st March, 1958, for Expenditure in respect of the Services included in the following Civil Estimates, viz.:—

CIVIL ESTIMATES, 1957–58



£


Class V, Vote 10 (Department of Health for Scotland)
3,290,470


Class V, Vote 11 (National Health Service Scotland)(Revised Sum)
39,464,380



£42,754,850

Orders of the Day — CIVIL ESTIMATES AND SUPPLEMENTARY ESTIMATE, 1957–58

CLASS I

3. That a sum, not exceeding £8,867,549, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class I of the Civil Estimates.

CLASS II

4. That a sum, not exceeding £56,562,601, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending


on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class II of the Civil Estimates.

CLASS III

5. That a sum, not exceeding £65,898,877, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class III of the Civil Estimates.

CLASS IV

6. That a sum, not exceeding £313,514,694, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class IV of the Civil Estimates.

CLASS V

7. That a sum, not exceeding £472,955,698, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class V of the Civil Estimates.

CLASS VI

8. That a sum, not exceeding £182,039,498, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class VI of the Civil Estimates.

CLASS VII

9. That a sum, not exceeding £50,655,010, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class VII of the Civil Estimates.

CLASS VIII

10. That a sum, not exceeding £193,184,409, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class VIII of the Civil Estimates.

CLASS IX

11. That a sum, not exceeding £123,705,986, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in Class IX of the Civil Estimates.

CLASS X

12. That a sum, not exceeding £311,143,325, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March. 1958, for Expenditure in respect of the Services included in Class X of the Civil Estimates.

ESTIMATES FOR REVENUE DEPARTMENTS AND SUPPLEMENTARY ESTIMATE, 1957–58

13. That a sum, not exceeding £249,725,430, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Services included in the Estimates for Revenue Departments.

MINISTRY OF DEFENCE ESTIMATE, 1957–58

14. That a sum, not exceeding £11,754,000, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for the salaries and expenses of the Ministry of Defence; expenses in connection with International Defence Organisations, including international subscriptions; and certain grants in aid.

NAVY ESTIMATES, 1957–58

15. That a sum, not exceeding £191,000,000, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March. 1958, for Expenditure in respect of the Navy Services.

ARMY ESTIMATES, 1957–58

16. That a sum, not exceeding £191,400,100, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1958, for Expenditure in respect of the Army Services.

AIR ESTIMATES, 1957–58

17. That a sum, not exceeding £247,650,000, be granted to Her Majesty, to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March. 1958, for Expenditure in respect of the Air Services.

[For details of Resolutions, see OFFICIAL REPORT, 24th July, 1957, cols. 538–546.]

First Resolution read a Second time.

Motion made, and Question proposed, That this House doth agree with the Committee in the said Resolution.

Orders of the Day — ECONOMIC SITUATION

4.13 p.m.

Mr. Harold Wilson: We have just had one example of Tory freedom at work, and the subject we are debating this afternoon, the inflationary situation, is another. On 10th April, the day after Budget Day, I described the Chancellor's speech as "an assignment with inflation". That phrase was indignantly repudiated by the Chancellor and the whole establishment Press. I do not think that any hon. Member or any responsible newspaper today, only 15 weeks later, would say that that warning was not justified.
It is the unprecedently widespread concern about inflation itself which has given rise to this debate, although the House will not wish to ignore other developments in the economic situation. There may be some who will wish to question the Prime Minister on his remarkable statement last Saturday—the "You-haven-ever-had-it-so-good" speech—which was in striking contrast to the Chancellor's two grave speeches only a fortnight ago.
Making every allowance for the intoxicating nature of his audience and his own exuberance in his job, some hon. Members might like to question the Prime. Minister about his claim that the gold reserves rose by £88 million in the first six months of this year, always the most favourable seasonal period for sterling. We should like to ask the Prime Minister—if he were here—whether it was just a Freudian slip which made him omit the reckoning that in this same period sterling area borrowings from the International Monetary Fund, the repayment of the U.S. waiver, and the first instalment of Adenauer Aid received in April amounted to £118 million against the £88 million increase in the reserves for which the Prime Minister was taking credit.
I want mainly to deal with the inflationary situation at home. Sterling is under heavy pressure, but we have said many times this year that the scale of the Government's borrowings and the mobilisation of the second line of financial reserves ought to be enough to see us through this year without a foreign exchange crisis. I see no reason

to change that view. But the scale of these borrowings and the need to repay them before very long make it all the more urgent, as we have frequently said, that we make all the changes necessary in our internal policies to enable us at the earliest possible moment to be able to reach a situation of strength in our overseas dealings. The first problem with which we have to deal is inflation.
I concede right away to the Chancellor that there is no new or sudden crisis. To some extent it has been over-dramatised and sensationalised, and the Chancellor bears his own responsibility for that and, no doubt, the Chancellor of the Duchy of Lancaster, who has been putting it round rather assiduously, to the embarrassment of the Chancellor of the Exchequer. However it may have been over-dramatised, this is not a new problem.
What has happened in the last two weeks has been a sudden realisation of the degree of inflation in the country, a sudden expression of widespread concern, a sudden shock as we pass further economic sound barriers—consols falling below 50, a 3d. letter—and 1 oz. at that—the lowest recorded price for War Loan, and so on. There is a realisation that the Prime Minister's plateau—and it cost the country £700 million to attempt to reach that plateau, £700 million in lost production—is now lost to us.
All these things have led to an attitude of hopeless resignation about the future of the currency to the point where it becomes not a change of degree but a change of kind, where many people in key positions, from underwriters at Lloyds to those responsible for trust funds, are redisposing their affairs on a scale which reflects their anxiety about the future of the currency. Of course, it is when the community comes to accept inflation as part of the natural order of things and takes action to anticipate the effect of inflation that a creeping inflation turns into a galloping inflation. It is for that reason rather than because of anything inherently new in the situation that we must all view this matter with the deepest concern.
Having said that, let us put the problem into its proper setting. Constantly rising prices have been with us since the early days of World War II. There has been no let up. To some extent inflation


has been world wide. From 1946 to 1951, when we were in power, the cost-of-living index rose by 32 per cent. From 1951 to 1957, with the Conservatives in power, it has so far risen by 28 per cent. It is fair to point out that the rise from 1946 to 1951 took place against a background of constantly rising world prices. World prices doubled in the period. We were more successful than any other country in keeping home prices down. It is also fair to point out that since 1951 the rise in the cost of living in this country has been against a background of falling world prices and that the cost of living has risen more in Britain than in almost any other country for which figures are available.
The Economic Commission for Europe has just published its latest quarterly report. It examines the cost of living position in seventeen countries, as compared with 1953. By March, 1957, prices in this country had risen by 14 per cent. compared with 1953. Only Greece, Spain, Finland and Yugoslavia—for what comfort that is to hon. Members opposite—showed bigger increases in the seventeen listed countries. Over the same period—and again this is worthy of note—the same report shows that the indices of increase in national production show Britain the lowest of all—bottom of the league—with a 13 per cent. increase in production in 1953 against an average for Western Europe of 29 per cent. So it is clear that Government restriction of production is not the answer to the problem of inflation.
I have said that this is a continuing problem, but perhaps I might fairly begin—for the benefit of those hon. Members still fighting the Korean war with undiminished vigour—with the period 1950–51, because that is the one that they always throw up at us. Yes—that was the year of the worst increases in prices in this country. The international scramble for commodities, and private and Governmental stockpiling, gave a fresh and vicious twist to the inflationary spiral. In 1952, when world prices fell, I believe that the Government missed a great opportunity to halt the spiral, when they deliberately forced up food prices at a time when I believe that prices could have been stabilised. They did it by slashing food subsidies.
Having started from that period, I take another three periods—the periods of the three separate Conservative Chancellors—not for the purpose of making political capital out of it; that would be only too easy; but because there are deep and sincere differences of view about this question of inflation on the two sides of the House. I want to examine the different approaches of right hon. Gentlemen opposite, as a preliminary to drawing conclusions from their experience and presenting, I hope, a positive alternative.
From 1953 to 1955, we had what has come to be known as the "Butler boom". Against a background of the easiest economic conditions that we have known for a generation—favourable terms of trade; falling world prices and no world dollar problem—we had the events which will always be associated with the name of the Lord Privy Seal. This was the era of decontrol; of "Invest in Success" and of tax incentives to investment; and it was also the era of the pre-Election Budget of 1955. It also led to the post-Election import crisis of 1955.
If we analyse what happened in these years, we find that from 1954 to 1955 alone, while our production rose by 3 per cent., our imports rose by 11 per cent. A special dollar problem was created by decontrol, because, during that same period when production rose by only 3 per cent, imports from the dollar area rose within a single year, by 30 per cent. Investment, largely inessential, boomed, and the Economic Survey published the following spring complained that:
a considerable upsurge in the capital expenditure of industry was being superimposed on the buoyant level of consumers' expenditure … the size of the expansion … was greater than our resources permitted.
As we all know, the Lord Privy Seal reacted to this situation by instituting the credit squeeze, imposing hire-purchase controls, raising the Bank Rate and introducing his autumn Budget, which taxed household essentials and which itself gave a fresh twist to the cost-inflation spiral. So much for the Lord Privy Seal, whose cancellarian epitaph was pronounced by the Prime Minister in imperishable prose which I could neither hope nor wish to rival.
I turn to 1956, which economic history will no doubt regard as the era of the Macmillan stagnation and the attempted


wage squeeze. The Prime Minister embarked upon a policy of deflating his predecessor and the economy at one and the same time. He was more successful in his first aim than in his second. I am not suggesting that there was a complete break of policy. Continuity of economic policy was shown by the continuation and tightening of the credit squeeze. The Bank Rate was raised to the highest level for a generation, and the investment programmes of the nationalised industries were cut and cut again.
The Prime Minister's Budget had as its motif the encouragement of savings, and in this alone the right hon. Gentleman has had some success. He also set out to make history by cutting Government expenditure, and we all know how that ended. But the main theme of his economic policy—I do not think that I am misrepresenting him—was to curb the boom. He said:
I think we have learned this lesson from the … past year. We cannot afford to run the economy flat out …".—[OFFICIAL REPORT, 17th April. 1956, Vol. 551, c. 857.]
As the present Chancellor in this year's Budget said, after quoting the very words which I have just taken from his predecessor:
We intended to reduce the pressure and we did reduce the pressure … In the process some potential production was lost, and that was inevitable."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 968.]
That is what he said in April. Now, in July, the Chancellor, growing more daring, or reckless—I am not sure which—blames inflation upon the failure of production to rise, and calls for higher production. The late Chancellor—the present Prime Minister—as part of his policy to curb the boom, abolished investment allowances and tightened the credit squeeze. As he hoped, production stagnated.
But there was another aim in his economic policy, namely, the "plateau". He asked the nationalised industries to hold down their prices, and he appealed to private firms to do the same. Then, with his promise of a plateau, he appealed for a wage freeze. His policy was to lower the tempo of production and to have a small measure of unemployment, nothing like the old Stockton days, but enough to reduce overtime and increase short-time working, and to squeeze industry so that wage claims could not be granted.
He aimed, in fact, to create conditions in which, to quote the famous words of the Deputy Chief Whip—
… the atmosphere of negotiation when they "—
the unions—
come to employers will be very different from what it has been during the years since the war.
Some of us feared, and warned the Government, that this would mean a worsening of industrial relations. We warned the Chancellor a year ago about the economic Suez group calling for a show-down with organised labour. We did not know then that he was leading that Suez group as well. The show-down came in engineering, where the chairman of the engineering employers happened to be a crony of the Prime Minister, so much so that he is now a Cabinet Minister, in charge of fuel and power, in another place, and, we hope, largely out of range of those hon. Members opposite who have already got two fuel and power scalps dangling from their belts.
The House will want to know whether there was collusion between the Chancellor and the engineering employers. We have no Bromberger papers to show as yet, but there was certainly a resort to force in the employers' blank refusal even to discuss the wage claim. As we all know, when the show-down came the Government changed their attitude. As the Economist commented, at the end of all this period of attempted wage squeeze:
Disinflationary policy probably raised labour costs, at least in British industry, more than galloping inflation had done in the boom.
Why did the squeeze fail? Why did the plateau policy fail? For this reason—that at the very moment when the Chancellor was appealing for wage restraint he was himself forcing up wage claims by forcing up the price of bread, milk, prescriptions and, above all, rents.
So much for the Prime Minister's attempt to deal with inflation. The new Chancellor, who took over this year, had to frame his policy regarding inflation amid the ruins of the policies of both his predecessors. He had this dilemma. Should he follow the Lord Privy Seal and have a "free-for-all," leading to inflation and an import crisis, or should he follow the Prime Minister and hold imports down at the cost of industrial stagnation? Should he,


as the Lord Privy Seal did, go in for expansion with inflation, or should he, as the Prime Minister did, go in for inflation without expansion?
The right hon. Gentleman decided, so far as we could measure what his policy was in the Budget speech, to let production ride. This is what we called his assignment with inflation. When we used those words in April, we were not complaining of the size of the Budget surplus; that is really irrelevant. The right hon. Gentleman keeps telling us that he is aiming at the same surplus as the Prime Minister aimed at a year earlier, but, of course, the Prime Minister was £300 million out in the event. Of course, the size of the inflationary surplus is irrelevant; in periods of inflation, some surplus of realised revenue over realised expenditure is not of itself disinflationary, because the greater the pressure of inflation the higher is the Budget surplus, borne like a cork on the waves. We were not even referring, when we used this phrase in the Budget debates, to the nature of the tax concessions, although, of course, the highly provocative nature of the Surtax concessions must, by this time, be obvious to all.
What was clear, even in April, was that the Prime Minister's little recession was over. Home consumption was rising. Hire purchase was reviving. Wages, profits and dividends were all on the upgrade. The credit squeeze, on which the Government relied, was weakening, and the Chancellor was unwilling to do anything except look forward to next year's Budget give-aways. Three months later, we have all the signs of inflation. The cost of living is still rising.
Right hon. Gentlemen have, I think, deluded themselves too long about the stability of the Retail Price Index over last year. They always take April as the starting point, and, of course, the reason for its apparent stability for long periods during some months last year when there was no increase in the index lay in purely temporary and seasonal factors in the price of vegetables, resulting from poor crops early last year—as the Treasury Bulletin for Industry recently made clear. Looking at all the other indices, the prices of publicly-owned and privately-owned industry have gone up. "Ernie" has done his calculations and

produced the 3d. one-ounce letter. Wage rates, about which we hear a lot, were in May 5 per cent. up on May last year. Industrial profits, in the first quarter of this year, according to the Economist, are per cent. up on those for 1956, and they, of course, cover the whole year, the year of the Prime Minister's recession. We can, therefore, I think, expect a further rise in industrial profits.
Dividends have gone up over the last year more than wages, despite their covering the period of the temporary recession. Ordinary shares this week, on the index, stand at 203 as compared with 183 a year ago—11 per cent. up on the year, an 11 per cent. increase in ordinary share values, tax free. I could, of course, show a much more graphic increase if I were to base the comparison on the low figure during the Suez Crisis; they have risen nearly one third from that point. But I am trying to be objective about these figures, and I am going back to last July.
The figures of home consumption are rising rapidly, especially hire purchase. The figures for household goods are up by 15 per cent., and the hire purchase figures for motor cars have doubled. As to the financial indices, bank advances since January are up by £167 millions, despite the fact that the nationalised industries have repaid £52 million. The expansion to other borrowers, therefore, was two-and-a-half to three times as great as in the same period of 1956. Bank deposits of clearing banks are up by £184 million in six week, the largest ever recorded for this time of year; compared with twelve months ago, they are up by £193 million. As the Economist said, commenting on these figures last week,
So much for the credit squeeze".
There are more serious things. The gilt-edged yield has been down recently to less than 0·25 per cent. differential compared with the yield on equities, and the dollar premium only yesterday was up to nearly 20 per cent. compared with prices in this country. It can, I think, fairly be said that the Chancellor has kept his assignment with inflation.
I do not need to spell out the dangers to our foreign balance, to our standard of life, to employment, and, of course, even more immediately, to the already


low, and month by month worsening, conditions of life of old-age pensioners and those living on small fixed incomes. That needs no arguing in this debate.
Looking back over the record of the three right hon. Gentlemen, the question arises, where has Government policy gone wrong? First of all, they have deliberately forced prices up and given repeated twists to the cost inflation. Now they are doing it again with rents. I should like to ask the Minister of Labour what his position is. We often hear appeals for wage restraint, and there is this very gentlemanly campaign of denigration against the trade union movement. Will the Minister of Labour tell us whether the Government now consider that the unions are justified in claiming more wages because of rent increases, or are they expected to absorb rent increases within existing wages? Surely, the right hon. Gentleman must have borne this in mind when rents policy was being considered by the Government.
The second reason why the Government have failed is that they have relied almost solely on monetary policy and now find that it does not work, at least, in the only way they know how to apply it. Thirdly, they have failed because they reject all selective controls. Their approach is, all or nothing, full steam ahead or full stop, the accelerator at full throttle or the brake. The Lord Privy Seal gave the green light and everything, especially the inessentials, boomed ahead. Then they had to cut, and when this Government have to cut, it is mainly the essential sector of the economy which they cut. We have warned them time and time again. We told them in 1954, in 1955, in 1956, and again this year, that the test in holding back or pressing forward should not be, "Is it public or private industry," but, "How essential is it?" Of course, they cannot accept that argument, because if one has to apply the test of essentiality in the private sector, it means controls, and it means selective controls at that. Investment in the public sector, in the main, is plannable. In the private sector it is plannable to a degree, only if one uses controls. I am sorry if these phrases offend the susceptibilities of the hon. Member for Kidderminster (Mr. Nabarro), but this is an extremely important matter.

Mr. Gerald Nabarro: My hon. Friends and I could not hear the right hon. Member for Huyton (Mr. H. Wilson); he happened to turn round.

Mr. Wilson: I beg the hon. Gentleman's pardon. I will repeat the words, because I hope that he will make use of them when he thinks about these things in future. I said that investment in the public sector is plannable. In the private sector, it is plannable to a degree only if one uses controls, and selective controls at that.
We believe—it is a fundamental difference of approach—that if one holds back the less essential investment, one not only gives the green light to essential progress by reducing competing strains on available resources, but one can do much more, one can positively expand the essential programme then and give it positive encouragement.
The keynote, therefore, of this system of selective controls should not be restriction but planning for expansion. This means, of course, expanding the basic industries, the export industries, and holding back the inessential industries to make this possible.

Viscount Hinchingbrooke: Dr. Schacht.

Mr. Wilson: I have already had one intervention from the noble Lord the Member for Dorset, South, this afternoon, and on that occasion he thought he could deal with these problems by quoting Tory Press misrepresentations of something I said years ago. If the noble Lord believes that planning for full employment can be done only by the methods of Dr. Schacht, it is time he came into the twentieth century. I want to illustrate this point for the benefit of the noble Lord.

Sir Ian Horobin: Was not Dr. Schacht in the twentieth century?

Mr. Wilson: I should have thought the hon. Gentleman, above all, would have realised the seriousness of this inflationary position and would stop trying to make silly cracks about it. We all know that Dr. Schacht was in the twentieth century. We also know, on this side of the House, that the twentieth century has produced democratic methods of controlling investment and economics.
In the Lord Privy Seal's free-for-all he did not expand the basic industries sufficiently, and when the boom occurred he had to spend 100 million dollars on imported dollar steel in 1955. We have often mentioned the amount of inessential building going on: I do not want to repeat all those arguments about large blocks of offices. It was highly significant that the Chancellor's scaremongering speech a fortnight ago took place at the opening of one of these large blocks of City offices. We have referred to overexpansion of the advertising industry; this year we shall be spending as a nation £30 million on T.V. advertising alone. We are spending nearly £400 million a year on advertising as a whole.
The scribes often tell us that if we hold back an inessential product by, say, building licensing, that only dams up the inflationary purchasing power temporarily and it pops up somewhere else. I do not believe it. When all the economists have finished arguing, inflation comes from decisions to spend. If an oil company is told that it cannot spend money on that petrol station, or a brewery cannot spend money on that pub, they are not likely to spend the money on anything else, and inflation is thereby reduced. I do not say that that applies to other forms of control such as import licensing. We say, hold back inessential building by investment control and actively expand essential building by tax concessions and public investment. We believe that a most important part of this process could be the use of Government factory capacity, and that is why we deplore the closing down of Royal Ordnance factories.
Monetary policy has a part to play in holding back the private sector, but only as one arm in a combined operation. The Government have placed far too much reliance on monetary policy and, having done so, they find that they really do not know how to make it work. The House is familiar with our complaints of the Government's monetary policy and our attacks on the cost of it—the increase in the National Debt charge, the increased cost of £150 million a year on the balance of payments, higher charges, rents, and interest rates for local authorities, the crippling of colonial development, the driving of Commonwealth borrowers to foreign

financial centres for their capital and a bad effect upon small businesses.
We have made another charge too, that the monetary policy has not even worked. It has not done what it set out to do. For five years the Government have put their faith in monetary policy and when they find they have not a clue how to work it they hand over the job to Lord Radcliffe to find out. This is bankruptcy. We shall have to wait two years for the answer and during this time the Government will not know how to use the monetary weapon, while on doctrinaire grounds they will not be willing to use any other.
I do not want to enter into all the recent arguments about the techniques of monetary policy. One thing is very clear, and I am sure that many Government supporters will agree with this: we could have had the same degree of credit squeeze—if that was the Government's policy—and the same restriction of bank lending, at a much lower Bank Rate. The Bank Rate as a controller is largely ineffective. It hardly restrains borrowing and it certainly does not restrain lending. The only time it seems to bite is when it is put up. That impact effect takes the form of a widening between lending and deposit rates, and even that impact effect disappears. It tends to become a sort of ratchet mechanism, going up by 1 per cent. and down by½per cent. The tendency must always be upwards if we rely on monetary policy.
Why is monetary policy ineffective? Some say it is because of taxation. At today's taxation levels the Bank Rate would have to be 10 per cent. instead of 5 per cent. to be equivalent to the pre-war 5 per cent. I remember the noble Lord making that point a year ago. It is a fair point to make for anyone holding his economic point of view. Others say it is because of the volume of Treasury bills. It is significant that the Governor of the Bank of England—which is the main instrument of the Government's declared policy—himself says that monetary policy cannot work effectively at present levels of Government expenditure. With the failure of the Prime Minister to cut Government expenditure, it seems foolhardy on the part of the Government to rely so much on a policy which the chief monetary controller says cannot


work in the conditions in which the Government are applying it.
The authorities are not willing to squeeze the banks' liquidity. They cannot operate on the cash basis because of Treasury bills. We cannot fund the floating debt, certainly in the present condition of the gilt-edged market, except at excessive rates of interest, so we have had funding by stealth, the Government broker creeping up behind the gilt-edged market and every time it raises its head cracking it one so that the market never has a chance to rise. I know that the hon. Member for Oldham, East (Sir I. Horobin)was putting a point not dissimilar to this only a year ago about Treasury bills.
Therefore monetary policy, as it works, is not the answer. That is why some of us would support a policy of sterilising some of the short-term debt. This goes far beyond Members on this side of the House. It would include sterilising some Treasury bills by a once-for-all conversion into Treasury deposit receipts, possibly wit)mandatory liquidity ratios thereafter. The trouble is that the Government have no idea at all about this matter except wringing their hands and saying that it is all the public's fault. We have their policy for local-authority borrowing. The Lord Privy Seal drove local authorities into the market for their borrowing and virtually closed down the Public Works Loan Board. This was done to improve the bookkeeping position below the line.
It does not affect in any way the volume of local expenditure but merely increases the cost and the difficulty of local-authority borrowing. Local authorities are driven to sections of the market, like the mortgage market and insurance companies and so on, who would be among the main suppliers of capital to the gilt-edged market. This is simply drying up the flow to the gilt-edged market, and contributing still further to the depression there. The Chancellor of the Exchequer must have realised that bookeeping fiddles of this kind are no substitute for an economic policy.
I want to ask a question. Have the Government a policy for dealing with inflation? If they have, they have been very secretive about it. The biggest blow to confidence has been the frank recognition by the Government of the dangers

of the present situation, combined with their unwillingness or inability to do anything about it. This is commented on even by newspapers who normally do not support anything said from this side of the House.
The Financial Times last Saturday said:
Rightly or wrongly the view has got around that the Government has, at least temporarily, given up the fight against inflation.
In the News Chronicle Sir Oscar Hobson, who is not a paid-up member of the Labour Party by any means, said this morning, under the heading "The Boneless Wonder":
The £ is under pressure because informed opinion here and all over the world is profoundly disturbed at the spinelessness of the Macmillan Government in tackling inflation.
A well-known weekly paper said last week of the Chancellor of the Exchequer:
By his feeble speeches he has revealed that he is bankrupt of any rational economic policy. And if he is not prepared to take the drastic steps that are probably going to be required there is a real risk that he may bankrupt his country too.
That was in the Spectator.
What is the Chancellor going to offer—the usual lectures, exhortations and appeals for restraint? Are we to get the steel White Paper after it had been embargoed for release last night and now postponed until tonight? Are we likely to get another gloomy tale of cuts in essential investment, cuts in both the production and use of steel?
I gather that the Chancellor will announce this afternoon this new Wages' Court. I leave it to my right hon. Friend, if he catches your eye, Mr. Deputy-Speaker, later this evening to examine the Government's proposals. I ask the Chancellor to make this clear in his announcement: if any independent body is going to make pronouncements on what wages the country can afford and what dividends the country can afford, will it, for instance, be allowed to say how much rents ought to be allowed to go up? I think that this is a fair point if we are to divide up the national cake fairly. Will it be allowed to say that the Rent Act ought to be repealed and what is the bearing of rents on the industrial situation? Did the Minister of Housing and Local Government consult this new delphic oracle before he introduced the Rent Bill? Will the Chancellor take its


advice before he gives any more concessions to surtax payers, especially on the eve of a General Election? Will it be allowed to criticise Government policy and, if so, will the Government change their policy. Of course not—that would raise fantastic constitutional implications. It is because I am certain that the Government have no clear answer to this problem that many of us suspect the Government of humbug in this connection.
I have just referred to wages, because wages are already at the centre of the problem of the cost-push inflation spiral, to use an American phrase. It is no good hon. Members blaming the unions for the inflation. Time and time again we have warned the Government that their policies could and must only lead to greater wage demands and industrial disputes. I do not intend to pursue that.
We hear of the need for wage restraint. Even hon. Members opposite are now invoking the spirit of Sir Stafford Cripps. I agree that we need today at least the same measure of restraint in wages, salaries, profits and dividends that Sir Stafford Cripps called for and achieved. That restraint must apply to rents as well as to other forms of income. I believe that such restraint can be fairly asked for only by a Government that will back their appeals by the same measures of social justice that underlay the whole Cripps' policy.
Last year, the Government lost the greatest asset that any Government could have in this matter of inflation—and which any Government has had since the beginning of the Second World War—and that is the support of the Trades Union Congress in wage restraint. I believe that the unions have shown great restraint since the war. In a sellers' market they could have made and exacted much bigger claims for their members than they have done. The end of wage restraint should not be laid at the door of individual trade union leaders, not even Mr. Cousins, who seems to have joined Mr. Nehru in the current Blimps' demonology. The responsibility rests clearly on the Prime Minister and his Cabinet.
Time and time again the T.U.C. have told the Government the steps that were necessary to secure restraint—some real control over rising prices and rents. The

Prime Minister forced them up. It suggested some control over inessential building. The Prime Minister equivocated and refused. It suggested a fair budget. The Prime Minister turned his back on it. A fair reward for a fair day's work was what it put forward—and the Prime Minister extolled capital gains and the windfall state.
Those who appeal for restraint in income must create a condition in which such an appeal can succeed. It means a greater degree of planning of our national resources and planning for expansion by giving a real priority to essential investment. It means a real assurance of price stability in return for wage restraint and, if necessary, by a temporary price freeze. It means a socially just Budget and social security provisions, including relief for those in greatest need, a tax on capital gains and a real drive against the citadels of fiscal privilege in this country.
I have indicated some of the measures necessary, in our view, to end inflation, to put value back into the £ and to ensure the economic survival of our country. I will summarise them briefly before I sit down.
First, we need to use such physical controls as are needed to hold back inessential investment, so that we can plan an ordered expansion of the investment needed for our basic industries and for export. This will mean, particularly, building licensing and, perhaps, control over the use of sheet steel or other scarce materials for inessential purposes. With these relatively negative measures we need positive measures: tax incentives, the full use of publicly owned industrial capacity in the Royal Ordnance factories and elsewhere, guaranteed orders and blanket agreements to call forth production of the goods that we most need.
Secondly, we also need a Budget strategy which gives an amount of public saving—a genuine surplus—large enough after allowing for private saving to meet the investment programmes of the country. Before hon. Members opposite say that this means higher tax rates, I would say that we can achieve this—yes, and do more, give justice to old-age pensioners at the same time—not by raising tax rates so much as by widening the tax base, such as the methods we have


suggested, making an attack on evasion and avoidance, supplemented, in time, by the savings accruing from the national superannuation scheme.
It is not, however, enough merely to have the right global budget strategy within that budget strategy. [Interruption.] I missed what the hon. Member was saying.

Mr. Kenneth Pickthorn: I thought "in time" were the operative words.

Mr. Wilson: It will obviously take time to introduce a national superannuation scheme, but I hope the hon. Member will recognise the relevance of that to the attack on inflation. Within the global budget strategy, we need to create the conditions of social justice by taxing the forms of spendable income which are now tax free, such as capital appreciation.
Thirdly, as part of the system of controls, we agree that monetary policy has its contribution to make, but it must be a monetary policy reflecting the conditions of the 1950's, not the 1930's or even the 1890's. The floating debt should be partially funded at low interest rates by such measures as the creation of Treasury deposit receipts. In our view, a rational and effective monetary policy need not mean high interest rates nor should we rule out the possibility—I put no higher—of a two-tier interest rate system with a lower rate for public and essential investment.
Fourthly, and lastly, as part—but only as part—of the real policy to stop the cost/price spiral, we should be prepared to consider, as a short-term measure, arrangements by voluntary or, if necessary, statutory control to keep prices for a period from rising above their present level in return for real assurances about costs. And prices, of course, are not all we need as a permanent measure of protection of the housewife and the consumer against short weight and debasement of the food package on the lines recommended in the second Hodgson Report.
To control inflation which we all agree, I am sure, is the major economic evil of the post-war world will mean sacrifices—sacrifices by everyone—and the biggest sacrifices will be preconceived ideas and doctrinaire refusals to consider new approaches.
If we can agree the conditions—and I have set out what, I believe, to be the minimum conditions—we can fairly and honestly make the appeal that must be made to the whole British people; but appeals with the hope of material gain cannot of themselves succeed. I make no apology for reminding the House of what Sir Stafford Cripps said just ten years ago in the memorable debate of August. 1947:
The quality of effort that is needed in the next few years is not such that it can be evoked by mere material considerations or by the intensification of self-interest or competitive self-seeking."—[OFFICIAL REPORT. 7th August. 1947: Vol. 441, c. 1764]
A Government that is replacing social purposes by concessions to vested interest and private gains, which has sacrificed economic purposes to economic frivolities has, in our view, forfeited the right to make such an appeal. But until such an appeal can be sincerely made and backed, not with words but with deeds, we shall not conquer the evil of inflation.

5.0 p.m.

The Chancellor of the Exchequer (Mr. Peter Thorneycroft): The right hon. Member for Huyton (Mr. H. Wilson)has ranged fairly widely over the problem and touched on one or two of the panaceas that have been offered. I do not propose to follow his speech in detail, because I would rather devote myself to getting straight down to what I think the problem is and where the solutions may lie.
If I say something about the nature of the problem, I hope nobody will accuse me of mere diagnosis. It is, after all, worth while identifying the disease before we specify the cure. Before I sit down, I certainly intend to say what policies we are pursuing and intend to pursue and to deal with one or two of those referred to by the right hon. Gentleman which are, perhaps, somewhat inapt to the problem which confronts us.
I start with the paradox which makes things so fatally easy for the critic—the paradox of prosperity, on the one hand, and a decline in the internal value of the currency, on the other hand. With that paradox before us, it is easy to make a cheap criticism of almost any comprehensive statement on this subject. I repeat, therefore, that the immediate and


urgent problem which confronts us is not something like the balance of payments problem which confronted us in 1951, when internal demand was holding back exports and sucking in imports—far from it. The external outlook is good.
Exports are up, £85 million higher in the first half of 1957 than in the first half of 1956, and they have been rising faster than the imports. The reserves are up, an increase of £88 million in the first six months of this year. Invisible earnings are moving upwards and production is going up. At one time, it was thought that on external current account from mid-1956 to mid-1957 we might just about break even. Now, we expect, we will prove to have had a surplus over the period of £125 million or more. There is no reason whatever why in the coming year we should not do better still.
All these benefits are against the background of prosperity in this country, probably—indeed, I think, certainly—greater and more widespread than ever before. Look where we will. There is a vast change from a quarter of a century ago. The cause for concern is neither industrial stagnation nor a balance of payments crisis. There is cause for concern because these great advances have been matched at home by a steady depreciation in the internal value of our money, and that process has gone steadily on for twelve years. It has been going on virtually without interruption, under all Governments, since the war.
The first thing I ought to say about it is this. I make no apology whatever for having stated in two recent speeches that this is an evil thing, that it does us damage economically and socially and that it should be our joint purpose to bring it to an end. I was, and I am, quite well aware that if a Chancellor of the Exchequer calls attention to any economic ill in the system, particularly one the cure of which has proved particularly intractable, some measure of criticism will follow and some markets will be affected. I say frankly, however, that I am not in the least dismayed by that criticism or those effects.
What would be far more damaging in the long run would be to ignore the facts or pretend either that they were different or that they did not exist, or even to pretend, as some would have me do, that

there is some slick economic solution which the Government can apply which will obviate any effort from anybody else. This is a problem, unlike some others, in which public discussion is essential, for while the Government have their part to play—and I shall describe it—there is not, as some appear to think, a neat tap inside the Treasury by which we can regulate the movement of prices as we wish.
If inflation is to be checked, the first essential is to have a country which really wants to check it and is prepared to accept the discomfort of any cures that may be involved. Until quite recently, I very much doubt whether this has been the case. The truth is that too many people have seen the benefits of inflation without observing any of its dangers or its disadvantages. Wage earners have enjoyed their wage increases and employers have enjoyed their bigger profits, but many have regarded these things as manna from heaven and as having no connection with the fall in the value of money, which they dislike as much as anybody else.
It is not an easy thing to cure people of a disease which they do not recognise. I begin, then, on the assumption that it is our joint aim, on all sides of the House, to halt inflation and that, while we may differ as to the means, we all recognise that we are not likely to find a simple painless solution.
One more thing which I should like to say before I speak of policy is that many other people suffer from inflation too. The same sort of debate as is raging in this country is raging in America and in France, Italy, Sweden and many other places. Indeed, this is in some ways fortunate for us, for it helps to preserve the relative external value of the £. It is not, however, an excuse for failing to tackle it ourselves. The social injustices of inflation are no less evil because they are being suffered by other people as well as by ourselves.
Furthermore, to those who take comfort from what is happening elsewhere, I would say this. We are a great industrial country depending for our very life on imports. We are international bankers and investors, with responsibilities to other countries as well as to ourselves. Therefore, we have much more severe limitations in our room for manoeuvre.


We must be competitive if we are to pay for our imports. We must always strive to ensure that nobody, at home or abroad, loses confidence in our ability to manage and sustain a currency which is so widely held.
I want to divide what I have to say about policy into two parts. I want, first, to say something about certain forms of action, which are sometimes thought of or spoken of as cures for inflation, which, in my judgment, are either harmful or irrelevant or, at least, inapt for the problem which confronts us. I want to get them out of the way—some of them were referred to by the right hon., Gentleman—so that I can concentrate on what I conceive to be the real issues. Secondly. I wish to describe a policy or group of policies which, if pursued with vigour and good sense, will, in my judgment, control or radically check the growth of inflation.
I start, then, with the polices which, in this connection at least, seem to me to be of little help. First, import restriction. I mention it because it has been referred to many times. From time to time, hon. Members have said that they would rather like to see it adopted. In my judgment it would be irrelevant and harmful in the context of inflation. It would make it worse and not better. It would decrease the amount of goods without decreasing the amount of money. It would hamper production at home, it would decrease competition and it would raise prices. I therefore reject it.
I now want to say something about controls in general. Controls in general, which were referred to in a fairly detailed manner by the right hon. Gentleman, tend to deal not with the causes of inflation but with their effects. To depend upon them is rather like stoking up the fire beneath the boiler and sitting on the safety valve. That was the disaster which happened to the right hon. Gentleman in 1951. There are two types of control which are, in general, particularly referred to. The right hon. Gentleman referred to them in his speech, and I should now like to answer what he said.
First, there is price control. It seems to me that price control is no answer whatsoever. I do not believe it ever was. I saw it in operation six years ago when I was first appointed to the Board of Trade. Prices had risen steadily under a

system of price control in the preceding years. They had risen not because the right hon. Gentleman wanted them to rise but because this system of price control does not, in fact, control prices. If one presses it home it drives the goods off the market, and that means rationing, and if one does not press it home, as generally happens, it is merely a dangerous illusion.
Secondly, there is building control. About building control I would say, "Do not do by controls what you can do by other means." If one wishes to stop building in the public sector, then the answer is not to put up the schools or the hospitals, or not to put up so many of them. If one wishes to reduce the impetus of house building, one can remove the subsidy. In the private sector one can make use of credit restrictions. I admit that one could by bringing in the whole apparatus of building control stop probably a few cinemas or one or two blocks of offices or some of the garages which were referred to the other day, but it would be a great effort for very little purpose. It would have no identifiable effect upon a cost inflation, and it would be dealing with the effects and not the causes.
Another possibility sometimes mooted in the Press is what I might call the "little Budget" technique. We could introduce further cuts in consumption, put up the Income Tax or restrain particular industries, have a little more Purchase Tax or another tightening of the hire-purchase regulations. If the trouble was that our expansion was going on too fast and we thought it might get out of hand, such measures would be appropriate, and at time in the past they have been appropriate, but, like import or building controls, I think they would be irrelevant in the present situation. Frankly, I am not attracted by the idea of trying to tackle what is in the main a wage-cost inflation by taking marginal amounts out of the housewives. They suffer quite enough from inflation already without adding to their burdens.
Then there is what I might call the "tranquilliser school," the belief that one can do it quite painlessly so far as the majority are concerned, that one can adopt some such device as limiting the note issue or taxing the rich. One does not stop inflation by refusing to print


bank notes any more than one cures a fever by trying to hold down the mercury in the thermometer. Nor do I suppose there are many people left, except the right hon. Member for Battersea, North (Mr. Jay), who seriously imagine that the bulk of the purchasing power in this country is in the hands of those with incomes over £2,000 a year. All these methods or policies, some of which I am sometimes asked to adopt, seem to me to obscure the realities of the picture which confronts us, and most of them deal with the effects and not the causes.

Mr. Harold Lever: In what respect do the right hon. Gentleman's financial controls differ from the other controls in respect of the charge which he has made against controls in general, namely, that they deal with the effects and not the causes?

Mr. Thorneycroft: If the hon. Gentleman will wait, I will deal with the financial controls in a moment.
I now turn to the policies which I think are relevant. I agree with the right hon. Gentleman in one thing. There is clearly no simple act of policy which is a remedy for inflation. If there had been, it would have been discovered a very long time ago. The policy to deal with inflation must be, as my right hon. Friend the Prime Minister said the other day, in the nature of a combined operation. The Government, the private employers, the trade unions and the nationalised industries all have a part to play. I have met on many occasions the representatives of these various sections in the National Production Advisory Council for Industry, and I shall be meeting them again very soon.
Parts of that combined operation are directly and parts much more remotely under Government control. I want to start with something which is right under Government control. The first duty of the Government is to see that the economic climate is right, or the balance 'of payments suffers. The balance of payments is bound to suffer where there are more jobs than there are people to fill them or where we are trying to do too many things at the same time. For this purpose, the Budget is the principal instrument of Government financial policy. It is central to this problem, and, in my judgment, the recent Budget was

well designed to play its full part in meeting it.
At the time we framed the Budget we were urged that stagnation was the problem. We were told in some quarters that tax should be slashed at all costs and that the credit squeeze was too severe. We rejected all this advice. We forecast a rise in consumption, investments and production, which has now taken place. We budgeted for a surplus of £460 million, adequate to cover all the investment in the public sector by taxation with the addition of small savings without adding a penny piece to the floating debt. So we can take development in that sector, if not comfortably, at any rate without inflationary pressure and in our stride. We stuck to that policy. We rejected Amendments put down by the right hon. Gentleman and his hon. Friends which would have cost £300 million more than we proposed. Talk about an assignment with inflation. The right hon. Gentleman wooed it like a lover during the Committee stage.

Mr. H. Wilson: We knew that the right hon. Gentleman would produce this argument, as his predecessor did last year. Is he not aware that we voted against practically all the taxation give-aways in his Budget? Also, he knows that we proposed planned acts of taxation—reductions here and increases there. However, our Amendment which would have achieved a corresponding saving by, for instance, widening the tax base was out of order.

Mr. Thorneycroft: I have listened with sympathy to the right hon. Gentleman's explanation of a very difficult position.
We refused in existing circumstances to give a further upward fillip to investment by restoration of the investment allowances. There was no cause of inflation, therefore, in the Budget, but it was a powerful instrument against it.
Now I turn to Government spending. The 1957 Budget provided for a surplus above the line of £462 million compared with a surplus of £290 million realised last year. This surplus was after tax remissions of £98 million. This was only possible by constant pressure to restrain all forms of Government expenditure. As I said in my Budget speech:


… the improvement in the budgetary position which the figures indicate has not been achieved just by luck. They are the outcome of considerable efforts by my two predecessors and recently by myself, with the co-operation and support of our colleagues, to keep the level of Government expenditure under control."—[OFFICIAL REPORT. 9th April, 1957; Vol. 568, c. 977.]
These efforts are painful, but they are also necessary, and they will continue. If we go on holding back Government expenditure while production rises we can give great benefit to the economy. We can do something more. We can continue safely to reduce taxes. [Laughter.] This is a serious statement on a matter which affects millions of people, and it is no laughing matter. We shall continue safely to reduce taxes which, however necessary they may be, make their own distinctive impact upon prices. But we certainly will not hold back Government expenditure without the full support of the House of Commons. Education, health, grants to local Government authorities, defence and many other items have powerful claims upon the public purse.
We are entering a period in which we are examining next year's expenditure, and I hope I judge the temper of the House rightly that it would wish to have the most stringent scrutiny of this. I am sure that I can count on those interested in limiting inflation to give us their full support in holding back Government expenditure, however unpopular that process may prove to be.
Next, I wish to say something about investment in the public sector. Investment in the public sector is fundamental to increased production. If we are to produce and sell, we need the coal, the steel, the power and the transport, and if we lag behind we cease to be a great industrial Power. Such investment raises two problems. It raises, first of all, the problem of the demand on our resources, and, secondly, it raises a very considerable problem of how to finance it. Both of them place some limits on the pace that we can go.
Production is necessary, but not production at any level, no matter what the cost or the strain upon the economy. Nevertheless, few industrialists would say today that we were over-investing in the basic industries—rather the reverse. I said recently to the National Production Advisory Council for Industry:

Investment is going to be large; it has got to be large if we are to attain the production which we need in other fields. But investment in the public as well as in the private sector must be matched with the savings which are available. I am not speaking here of sudden panic slashes; I am speaking of the long-term phasing of investment.
I repeat that here. In the short-term our plans appear to be well within our resources. Over the year we cover the basic public investment without inflation, that is to say, we cover it by taxation and savings—we cover it without adding to the floating debt. That is the path of financial rectitude and the one we should go on following. But, in the long-term, it is the responsibility of Government to make as certain as can be that the combined investment programmes of the basic public sector do not rise to a point at which there is real danger of overstraining the economy, or at which intolerable financing problems might arise.
We do not intend to let this happen, and for that purpose it may well he necessary to rephase some programmes to see that not too many reach the same peak at the same moment. We shall not hesitate to make the necessary adjustments.

Mr. Nabarro: Before my right hon. Friend leaves investment in the public sector of industry, would he not agree and tell the House that, in view of the magnitude of that investment in the aggregation, there are very great dangers of extravagance in spending by the nationalised industries? What does he propose to do to eliminate that extravagance which makes no direct contribution to increased production in these basic industries?

Mr. Thorneycroft: I would say just this to my hon. Friend. I dare say that if we searched the investment programme of any industry, public or private, we should find some examples of extravagance. The point I am making is that there have to be large programmes of investment in that public sector, and it is unrealistic to think that we can solve our problems by slashing them in the short-term, though, in the long-term, it is the duty of any Chancellor to see that they do not reach an intolerable peak at any point in time. In my judgment these programmes are not the cause of inflation; they are the


necessary basis of the expansion of production which is needed to overcome it.
Now as to the credit squeeze. The credit squeeze has operated, is operating and will go on operating. It has, indeed, been strengthened. The Capital Issues Committee now examine to see not only the purpose of the lending, but the manner of the lending. Bank overdrafts are not normally available for capital purposes, but only for short bridging operations. It is not working only on the small firms; it is working on many of the large ones too.
The truth is that these Government measures have worked much more successfully than is generally realised in reducing demand, in restoring our balance of payments position, which has swung over from a deficit into a surplus, and in providing the basis for renewed expansion this year. How far or how much further should the Government press these policies? Should the credit squeeze be tighter? Should Government expenditure on such things as health, education or defence be restrained still further? There are some who feel that part of any solution is to be found in deflationary action of this kind, and, of course, it is true that economy by Government and restriction of credit by the banks have their part to play.
I would just say to those who urge these actions that they must have the courage of their convictions. When we see, as we may see in certain areas and as a result of these reductions and restrictions already in operation, some increase in the number of unemployed or some decrease in the number of unfilled vacancies, we must recognise that it is the corollary of reducing the pressure of demand. Cutting back by Government has its contribution to make, and it is certainly our intention to keep up that pressure. Nor do we complain if others keep up the pressure upon us.
Another school of thought, with which I do not find myself in agreement, is that we could find a solution by deflation alone. Such a view would demand a change of method which would differ not in degree but in kind from what I have been speaking of. We could put up the taxes. We could cut down investment. We could make credit much dearer and much scarcer either by the

technical methods proposed by the right hon. Gentleman in his speech or even by more direct methods. We could no doubt organise our own slump and force up unemployment to a figure needed to end wage claims. But to do all these things would be a drastic departure from the object for which all of us on all sides of the House have been struggling since the war. What we have been seeking is full employment in a free society, and it would be a sorry reflection on our society if in search of stable prices we could only find them by throwing away the full employment or by throwing away the freedom.
This brings me to the centre of this problem, namely, the question of incomes and prices. I want to state the facts about this problem as I see them quite plainly because I think that on all sides of the House we have to face them together. In 1956 production was very little up. Wages and salaries were 9 per cent. up on the year before, or an increase of £900 million. Profits were 3 per cent. higher, an increase of £110 million. Of this £110 million increase in profits, about half was undistributed. Of the other half about 50 per cent. was paid in taxation, leaving no more than £25 million extra in the pockets of the shareholders. Of the additional £900 million in wages and salaries, rather more than £100 million was taken in taxation, leaving between £700 million and £800 million extra in the pockets of the earners.
Extra purchasing power on this scale, unmatched by increased production, must have a powerful effect upon the economy. If I might put it in perspective, this is the equivalent in a year of trying to run two or three additional navies. That is the measure of it. It is more than all the rents and all the rates in the country. It is the equivalent of another, a bigger and a better Health Service. If we put that into the economy then, quite obviously, it will have some quite remarkable results.
Since then, the last round of wage increases will, of course, add several hundred millions more, There is no kind of increase in efficiency which could absorb that £900 million in costs, and if that kind of money is put in it can only come out, in whole or, at least, in large part, in higher prices. We cannot subsidise or fake prices on that scale.


It is simply not possible to raise taxes on that kind of level. It is out of context with the sort of things about which we talked in the Budget debates.
What we are seeing here, therefore, is the result of wage movements over the last eighteen months coming out in the form of higher prices—in the price of coal, the price of transport, increased postal charges, in the price of electricity and of gas some of the regional gas boards have announced increases, and others, no doubt, are to come. These price increases are the result of the past. If we seek to meet them by further wage increases it will certainly start to happen all over again. In part, those price increases reflect some contribution to capital expenditure. These is nothing wrong with that. There is every reason why those industries should contribute to their capital development. But, in the main, they reflect increased wage costs.
These price changes clearly have their effect in other sectors. The steel industry is acknowledged to be very efficient. Its productivity increased by 20 per cent. in the five years to 1956. But, even with this, cost increases cannot fail to be reflected in increased prices, and today the Chairman of the Iron and Steel Board has announced such increases. They arise, broadly, from the same causes as I have mentioned, though, in the case of steel, provision for capital development is a more important factor, as the plans for the future development published by the Iron and Steel Board clearly indicate.
One way or another, however, the question always comes back to this. How does one approach the problem of wages? I think that the first thing in answer to that question is to say that we can neither fix them nor freeze them. To seek to fix all incomes in this country—and if we fix wages we clearly fix dividends and everything else as well—is not, I imagine, a solution which would appeal to anybody, and I think that we can reject it.
Nor does anybody seriously contemplate trying to freeze wages. Wages should move up in an expanding economy. Men should share the benefits of their increased production, and it is certainly not inflationary for them to do so. What has gone wrong is that we have sought to pay wages out of relation to

production, and if we are to have any hope of dealing with inflation we must stop doing it.
The rôle of a Government is not to interfere with collective bargaining—that is quite right—but it is carrying that doctrine too far to say that the Government should be indifferent to the relation between incomes and production. It is really the task of Government to say plainly that if higher wages are paid, unmatched by what we as a nation produce, we are quite deliberately creating our own inflation.
Nor, at this moment, can anyone seriously believe that a solution to our problems is to be found in the converse of that proposition, namely, by working less for the same amount of money. Of course, we are all in this—the Government, the employers, the trade unions and the consumers—but it is my duty to state these facts as plainly as I can—

Mr. Nabarro: Hear, hear. Rub them in.

Mr. Thorneycroft: These matters of wages, prices and profits are bound to be controversial. No one will readily accept what anyone else says about them. One contribution which we think can be made, not as a solution but as some help in the problem, is the establishment of an independent and impartial council on Prices, Productivity and Incomes, and we intend to go ahead with it. That council will have the following terms of reference:
Having regard to the desirability of full employment and increasing standards of life based on expanding production and reasonable stability of prices, to keep under review changes in prices, productivity and the level of incomes (including wages, salaries and profits)and to report thereon from time to time.
I shall be announcing the names of the chairman and other members of the Council as soon as possible.

Mr. H. Wilson: Will the Chancellor now answer my question? Will the Council have the right also to deal with the question of the level of rents in the country, as it has with other incomes and changes in costs?

Mr. Thorneycroft: Perhaps the right hon. Gentleman will wait. I was about to describe what the Council could and could not do. Our hope, at any rate, is


that it will create a fuller appreciation of the facts, both in the public at large and amongst those more immediately concerned with prices and cost matters.
I want to make certain things quite clear. The Council is not there to arbitrate. It is not a wage court. It is not concerned with specific wage claims or disputes as is a wage-fixing body. Its purpose is to survey past experience and to deduce from it some guidance for the future. Clearly, it cannot concern itself with every aspect of economic policy. But it would, for example, be covering some of the matters to which I have been referring in this speech.
It will be free to comment on general problems inside the scope of the terms of reference, such as the effect of increased costs and prices on the competitiveness of United Kingdom exports, and on the ability of the United Kingdom to pay its way abroad; and on the relationship between incomes, profits, investment and productivity. I repeat, we do not put this forward as a panacea, but I am confident that the Council has a useful rôle to play, and I am also confident that all those who wish to tackle inflation will co-operate with it and will pay heed to its reports.
Meanwhile, the policy should be plain. It is, first of all, that Government spending must be held down—as it was this year. That means some difficult decisions as the stage is set for next year's Estimates. Secondly, that investment over the years must be planned to match savings and, if necessary, revised. Thirdly, that the credit squeeze continues so as to prevent a boom, and that means continued pressure by the banks. Fourthly, that wage and profit increases must be related to production.
I recognise that this means adopting, on occasions, an old-fashioned policy of saying "No", and if saying "No" leads to some measure of disagreement, so be it. It would be better to disagree than to drift. For our part, we intend to press home these policies. They may be unpopular, but they are right, and they provide the best road yet suggested for dealing with the problem of rising prices.

Mr. H. Wilson: Before the right hon. Gentleman sits down, will he now tell us his policy for dealing with inflation, be

cause he has not announced a single new policy?

5.39 p.m.

Mr. Harold Finch: Much has been written and said in the last few weeks about the increasing dangers of inflation, and this debate is the outcome of the anxiety which we all feel at the trend of events.
Coal prices have been referred to, and attacks have been made on the National Coal Board and on our mineworkers. It is quite evident that criticism of the mining industry is being used as a smokescreen to cover the failure of Government policy—a policy which has resulted, as we all know, in increases in Purchase Tax, cuts in food subsidies and in certain sections of the welfare services, in increased rents and increased health contributions.
We are asked to forget these factors. It is too much to ask the workers to make these sacrifices and to exercise restraint when, at the same time, these burdens are being placed upon them and they know that relief is being given to Surtax payers. The Government say on the one hand, "We must make sacrifices", while on the other, the Chancellor relieves the Surtax payer. That is the root of the discontent in the industrial community. Example is better than precept, and the worker wants to know what sacrifices are being made by the wealthier classes.
We are asked to ignore these factors and to direct our attention more to the mining industry. I do not say that there should not be discussions in this House about the nationalised industries. I am among those who believe that from time to time we should review the workings of the nationalised industries, and I am sure that the Coal Board or any other publicly-owned industrial organisation would always be prepared to consider any helpful criticism that may be made by hon. Members.
But when allegations are made about the "unreasonableness" of the miners' demands, the lack of productivity and bonus turns, what contribution does this make to the solution of the serious economic position in which we find ourselves? None at all. What it does is to create a feeling of bitterness among miners and their families, and it also discourages Coal Board officials and


mining engineers who are carrying out a difficult and onerous task in winning coal for the nation.
It is about time we turned the searchlight upon the private sector of the economy. We have committees inquiring into nationalised industries. I welcome debates upon the coal mining industry. I hope we shall have an opportunity to debate the coal industry in the very near future, but we must also give equal attention to the private sector. What about the prices in the private sector? One only has to look at the price index of commodities issued by the Board of Trade for the period 1949–57. I will quote some of these commodities at random
Coal prices have gone up 76·5 per cent. between 1949 and 1957. But what about the other commodities? Sulphuric acid has gone up by 81 per cent.; benzole by 93 per cent.; aluminium by 80 per cent.; wool top by 79 per cent.; Harris tweed by 81 per cent.; carpets and rugs by 75 per cent.—slightly less than coal—and rubber tubes by 88 per cent.
I mention these factors to indicate—and this is the problem with which we are faced—the rising prices which, in turn, give rise to demands for higher wages. I mention these increases to emphasise that when people complain about the mining industry they should look more closely at the situation in the private sector. Evidence has been given before the Monopolies Commission to show that prices of commodities were being maintained artificially. We had the well-known example of television tubes, which were produced for £4 each and the retail price of which was £15 to £20. There were other examples, including tyres and electric lamps. I am not dealing with coal now; these commodities are produced as a result of private enterprise.
It was interesting to listen to the Minister of Transport on this matter. He said that increased freight charges had been due in considerable measure to the price of coal, steel, higher wages, and other factors, but he went on to say:
… it is worth noting, to be fair to the Transport Commission, that many of the Commission's suppliers did not try as hard as the Commission itself to hold down their prices."—[OFFICIAL REPORT, 10th July, 1957; Vol. 573, c. 401.]
There we have a confession.
Let me deal with the question of coal, which is causing so much stir among hon.

Members opposite. Industrial coal is being sold relatively cheaply. Let me quote not from any party political periodical, but from The Listener of 3rd March, 1957, which published a broadcast by Mr. John Raven, Director of Coal Trade Associated. He said:
The British miner produces more than the German, French, Dutch or Belgian miner on both shift and year basis. The coal he produces sells for 30s. per ton less, quality for quality, than that mined in those other countries. Because our coal is so much cheaper than any other obtainable in Western Europe, British industrialists have a great advantage over their competitors on the Continent—an advantage none the less real because it is so seldom acknowledged.
I think that the Chancellor said some time ago that we have to be very careful that we do not price ourselves out of the foreign markets. Coal has not priced us out; it is being held at a cheap price. Industrial coal is making a valuable contribution to our economy. That is all the more reason why an inquiry should be made into the private sector.
The price of domestic coal has gone up, and we are all very concerned about it. It has gone up 6s. 6d. a ton on the average, the Government have some responsibility for this. How is this sum of £66 million, which is responsible for the increase of 6s. 6d., made up? First, there is £5 million in respect of mining subsidence. I am glad to sec the Parliamentary Secretary to the Ministry of Power in the Chamber. We on this side of the House pleaded with the Government not to put the extra 6d. on the ton of coal. We said that it was not the full responsibility of the Coal Board. We said that this matter ought to be considered by the Chancellor, having regard to the fact that subsidence was due largely to the old coal owners and not to the present coal owners. But the Government put an extra 6d. a ton on the price of coal for the domestic user to pay.
What is the other factor which makes up this 6s. 6d.? Over a period of time it is made up of £10 million in respect of the Mines and Quarries Act. That is to improve the safety and health of those employed in the industry.

Mr. Nabarro: A Tory Act of Parliament.

Mr. Finch: When I think of my own comrades and friends who died from pneumoconiosis, who gasped for breath


in the mining valleys of South Wales, when I remember the explosions which have occurred in the industry in the years gone by, is this extra money too high a price to pay for the safety of those who work underground to hew coal for the nation?
I do not believe that people would begrudge the miners that amount. I would like hon. Members to come to my constituency and see men gasping for breath. They have given years of labour to win coal for the nation and there should be no doubt whatever about allocating this £10 million to improve health and safety measures in the mining industry.
Consider the wages in the industry. It is true that there has been an increase in wages—

Mr. Alfred Robens: Tell them the basic rates.

Mr. Finch: The minimum rate for a man working underground is £9 10s. 6d. The figure for the man on the surface is £8 10s. 6d.
Can any right hon. or hon. Member maintain that that is a high wage, with the present cost of living and high prices? Let us try to be impartial about this. It is true that the average wage is higher. The Chancellor said, and I agree, that the more a man produces the more he should be paid. The average wage in this industry is about £15 a week, because the more coal a piece-worker produces the more he receives. Is there any complaint about that?
It may be asked: how is this figure of £15 arrived at? A large amount is earned by working on the voluntary Saturday shift. I do not criticise those who like Saturday off. I think that we should all have Saturday off. There are a large number of workers who do not work on Saturdays. But many miners are working on Saturdays and during that voluntary period they produce 12 million tons of coal a year.
Where should we be without that coal? Facing the possibility of serious unemployment. The average pithead price for coal is £4 3s. 6d., but what does the consumer of domestic coal have to pay? In London, for Grade 2 coal the price paid by the consumer is £9 13s. 4d. It costs more to distribute the coal than to pro

duce it. We agree with the Chancellor that we cannot continue in this way, but this is the foundation of the problem. This is what the consumers of domestic coal have to pay. In Southampton, the price is £10 5s.

Mr. Nabarro: Surely the hon. Gentleman wishes to be fair in this matter. The British Transport Commission, in the form of the railways, distributes 180 million tons of coal traffic each year. The difference between the pithead price of £4 3s. 6d. and, for example, the retail price in Southampton, a difference of £6 a ton, is very largely accounted for by the charge by Transport Commission for freight.

Mr. Finch: I have already referred to freight charges. Is the hon. Gentleman saying that the difference of £6 should be the fair difference between production and distribution? The same thing applies in Bristol where the price is £9 5s.
Let us now turn to output. There has been a great deal of criticism of the mining industry which has been blamed for inflation. In the first 28 weeks of this year output was increased by 2¼ million tons over the corresponding period for last year. In the circumstances that is quite an achievement. Since 1946, the overall output has gone up by 30 million tons. It may be argued that recently there has not been an appreciable increase in the overall output and that is true. It is due to the extra holidays granted to the miners.
Statements have been made in the House, and Questions were asked the other day, about the lack of productivity. In 1946, the productivity figure per man shift was 1·03 tons. In 1956, it was 1·23 tons. At the coal face, in 1946, the figure was 2·76 tons, and today it is 3·33 tons. That is a considerable increase. We must remember, when we are discussing this industry, that we are not dealing with factories. Development has to take place. One has to sink a pit and start to extract the coal and as soon as that happens the pit begins to die. It dies a long, lingering death and its length of life depends upon the proper development of the industry. Therefore, development is a very important matter.
We have been importing coal, which is a charge on the Coal Board, but imports of coal are declining. In 1955, the figure


was 11 million. In 1956, it went down to 5 million and this year it will be down to 3 million, which should be a source of encouragement to this House having regard to the existing difficulties.
When the coal industry was nationalised 50 per cent. of the mines were unprofitable, and, had we followed the pattern of the old coal owners, many of these pits would have ceased to produce coal. We should have been producing about 140 million tons, whereas production has gone up far higher than this. The problem which faces us is not one of production, but of consumption, which is increasing week by week. As the Chancellor reminded us, for the last ten years there has been full employment. Industry has been expanding, and month by month more and more coal has been consumed. Every month the demand for coal is growing in order that industries of the country can be kept going.
Had the miners been unreasonable, if there had not been able leaders in the National Union of Mineworkers, we might have been faced with serious stoppages of work. I say frankly that the miners have shown great restraint. I am not for a moment justifying unofficial stoppages and neither do the leaders of the Union. I admit that there is a great deal of absenteeism, some of which cannot be justified. But do not let us exaggerate the matter. The miners' leaders are grappling with these things. 'They meet the men every week and discuss these problems with them, so do not let us exaggerate.
A miner is no different from any other member of the community. He likes to have a day off sometimes. Why should we regard the miners as being different from any other members of the community? The miner likes to go to the races on occasions, and why not? He likes to go to a concert, or to some other event; and there are always things like family bereavements, which are regarded as voluntary absenteeism. I beg the House not to inflame the miners and make things more difficult for this great industry. I believe that the miners can help to pull us out of the present difficulties if they are given fair play.
I regret it, but I must say this to the hon. Member for Kidderminster (Mr. Nabarro). He and his industrial friends are getting cheap coal. At the same

time, the hon. Member is making cheap gibes at the industry and the people who are producing that cheap coal.

6.0 p.m.

Mr. John Hobson: I must ask for the indulgence of the House on this, the first, occasion upon which I have had the honour to address it. I hope that if I trespass against any of the traditions or niceties of the House I may be forgiven, and that I shall do better on another occasion. I am bound to confess that I feel precisely like the novice on the high dive, and that the only solace I have is that, suitably for the occasion, at least I know that the waters into which I am about to plunge are deep.
I know, of course, that on such an occasion I must not say anything which is controversial. I should have thought that on this particular subject it was almost impossible to say anything that was not controversial, but at least I hope it will be understood that I shall try to say nothing which is provocative and to address the problem in the spirit of the Epistle for last Sunday, and not render raillery for raillery.
The distinction on the question of the cost of living which is borne in mind by very few people, and certainly by very few constituents of mine, is the distinction between the standard of living and the cost of living. The standard of living concerns only the actual material benefit which the people enjoy as a result of their earnings, and the cost of living which we are discussing today, is a problem only of the value of the £. Since the £ has lost its value as a permanent measure of how we are doing, it has become very difficult for all of us to assess exactly where we are getting.
A large number of the constituents who live in my division are employed either in the neighbouring divisions of Coventry and in the motor industry, or in my own division, working on ancillary parts required for the motor industry. I may, perhaps, be forgiven, therefore, for suggesting that we should look for a moment at the standard of living of this country against—not a gold or £ standard—but a motor car standard.
Between 1947 and today, the number of passenger vehicles per 100 of the population has more than doubled, and when we are considering the position of this


country upon that basis, as compared with other countries, we stand high in the international league. America has three persons per passenger vehicle. This country has 13 persons per passenger vehicle. In Europe, other than Iron Curtain countries and the United Kingdom, there are 35 persons per passenger vehicle, and it is estimated that in the Republic of China there are probably about 30,000 persons per passenger vehicle. I quite appreciate that this is not an absolute or final test in any way, but it is an indication of the standard of living which we are at present enjoying.
Over the whole of our economy there falls now the shadow of the rise in the cost of living. People are beginning to feel the greatest possible anxiety. They ask: what can be done about it? The ordinary housewife, the ordinary wage-earner, the common man, in whose age we now live, have at last seen that it is a vital problem which this country has to face. I do not desire to expatiate on it, but there are really four vital reasons why it must be dealt with.
In the first place, all hon. Members realise that it presses hardest upon those who can least afford to bear it—ithe poor, the unorganised and weak, and those who cannot catch up with the rise in prices. Secondly, even those who have the illusion that they are keeping abreast of it are probably not doing so, because they forget that by increasing their dividends, or profits, or wages, they are, in fact, lifting themselves up into a higher tax group, so that the net real earnings left in their pockets are substantially less.
In 1947, a person with £500 before tax was deducted could buy certain goods and services. It was his standard of living. Today, before tax is deducted, to buy the same quantity of goods and services he requires nearly £800, but, in the interval, he has raised himself into a much higher level of tax payment, and, therefore, his net real standard of living, in the end, is less than it was in 1947.
Further, there are the risks of pricing ourselves out of the international market, the risk that we may ultimately have to devalue the £, and possibly have to have a floating rate for the £. If inflation becomes galloping inflation we may arrive at the disasters which overtook some Continental countries before the

war where the disasters and distress were widespread and serious.
I should like to address myself not to what Government policy should be to meet this problem, but to what message the Government, I hope with the support of many hon. Members, can send to the ordinary people on how they, individually, can assist in fighting the battle of inflation. I am sure that there is an anxious desire not only in this House, but throughout the country as a whole, to deal with this question of inflation.
Very largely, the demand at the moment from the Press and the public is that prices should be pegged, but merely pegging prices is like trying to remove the rash without curing the disease, and it is necessary, in my view, to see what can be done—by ordinary people especially—to stop inflation, because rises in prices are only a symptom of inflation and not the cause of it.
I should like to suggest that, with the concurrence of hon. Members on all sides, a message should be sent out from this House that there are two things which the ordinary people can do, and two ways in which they can help to deal with the root causes of inflation. First, that higher costs, wages, profits and salaries can only be met either by greater efficiency or by higher prices; and, secondly, that we must, by our own personal savings, secure the industrial future of this country.
I did not understand the right hon. Member for Huyton (Mr. H. Wilson), who opened the debate, to disagree with either of those propositions, though he qualified his acceptance of them by saying that it was not what the Government have said. All I say is that I hope both sides of the House will join in telling the ordinary people that these are two essential things which must be done by them. Perhaps I should deal for a moment or two with each of them.
I have recently visited two factories in my division which are not directly concerned in the motor trade, but in making ancillary parts for it. Each management separately told me that between 1947 and today the actual labour cost of producing their articles had not increased at all, despite the fact that the wages of their employees had risen in line with the high standard of wages of the motor industry in the Coventry area. That is a very remarkable record.
It is not that the proportion of the cost of labour had not risen; it was the actual labour cost of producing their goods which had not risen at all. That had been achieved by mechanisation on the most extensive scale, by the employment of machine tools of every kind and of the most extraordinary ingenuity, by expanding the production of these factories steadily over the years, by good co-operation between employees and management, and, of course, by the efforts of the workers themselves.
That shows that by increased efficiency and increased production it is possible to produce at the same labour cost and yet pay considerably increased wages. That is the method by which, in the future, I hope it will be possible for the wages of the people to be increased without there being, at the same time, increases in cost to the general public who have to buy the goods,
The increases in basic wages over the last few years have been remarkable and the rate of increase of basic wages has been constantly growing. I speak of the basic weekly wage rates and not weekly earnings, which, hon. Members will realise, are larger than the basic weekly rate. Those figures increased in 1954 by £185 million, in 1955 by £265 million and in 1956 by £343 million, and in the first five months of this year they have increased at the rate of £396 million a year. If increased efficiency in production is to absorb increases in wages of that nature, the efforts that must be made will have to be considerable indeed, in all industries and by both sides of industry.
Is not the problem, however, either that those increases of that scale must be absorbed by increased efficiency or that those increases must be postponed for a while until efficiency can absorb them, unless costs are to rise? On that aspect, therefore, I hope that all hon. Members will join in telling the public as a whole that wages can rise with increased efficiency, but that if efficiency is not increased costs must inevitably rise if wages themselves rise.
The other matter upon which I desire to expand a little is the question of savings. It is, as the right hon. Member for Huyton said, vital that we should continue to lay the foundations of our industrial prosperity for the future. There

is much to do in roads, in railways, in nuclear power stations, in research, in the re-equipment of industry and, if the money can be spared, in helping capital development in the Colonies and the Commonwealth overseas and in all the under-developed countries. That huge programme for our development in the future can come only from the pockets of the individual people.
I hope that the Government will make it clear to everybody that thrift is still a humble but vital virtue and that savings are as important now in the battle of inflation as ever they were at the time of the Battle of Britain. After all, as we look back into history, the capital accumulation of the ages has always come from the pockets of those who had the money. In the medieval times, the Church had concentrated in its hands the power of the purse and it has left its memorials behind it. From the sixteenth to the eighteenth centuries, the farms, the barns and the mansions that we see scattered around the country spoke of the agricultural wealth of England.
In the nineteenth century, the industrialists took over and I need not remind hon. Members what effect they had upon the appearance of the country. But what is to be said of the accumulations of capital of the ordinary wage earner? Is his only memorial to be the multiple stores and shops which are the spending palaces of the people, or can he not, from his savings, produce something which will secure a better future for all of us hereafter?
It is estimated that the country is spending over £500 million a year on gambling. Whenever I stake my money, my bookmaker tells me that I have invested it, but I should have hoped that a good deal of that money could have been diverted into a flutter on the future of the country and that by steady savings by all the people, it might be possible in a small degree to deal with the inflation.
It is obvious that the savings cannot come from the pockets of those who pay tax, and those who are below the tax level obviously cannot be expected to any extent to be able to save, but at present the vast weight of the money after tax has been paid is with the wage earners


who have gross incomes of under £800 a year.
From the national Blue Book issued by the Commissioners of Inland Revenue, it can be seen that after payment of tax on individual incomes, those with incomes before tax of under £800 a year enjoy 72 per cent. of the net income of the country after payment of tax and another 10 per cent. of the net income after tax is enjoyed by those with gross incomes of between £800 and £1,000 a year. It therefore appears that 82 pet cent. of the income available for savings from personal incomes after payment of tax is enjoyed by people who have a taxable income of under £1,000 a year.
I hope it will be noted that the National Savings Committee has recently launched a campaign to secure regular weekly savers in industry and commerce. It has the support of the British Employers' Confederation and of the Trades Union Congress. I am sure that one thing that all ordinary people can do to assist in the battle against inflation is to become regular savers, to divert even a small weekly part of their income towards savings, and thus, by multitudinous though small amounts, to increase the total amount of capital available to fight the battle of inflation. In those circumstances, savings might well indeed be a saving for the country.

6.18 p.m.

Mr. Herbert Morrison: May I first, as the House would wish, congratulate the hon. and learned Member for Warwick and Leamington (Mr. John Hobson)on an excellent and encouraging maiden speech? [HON. MEMBERS: "Hear, hear."] He follows in the representation of the constituency of a distinguished Parliamentarian and former Prime Minister whose departure we were all sorry to have to experience because of grave illness.
The hon. and learned Member has spoken on a subject of great importance and he has spoken with ability and knowledge. He said that it was his duty not to be controversial. We therefore look forward to hearing him again, when it will be his duty—at least, his privilege—to be as controversial as he wants and to put up with what comes back at him. Anyway, we have enjoyed his speech, and we hope to hear him again. In my

maiden speech I did not ask for indulgence. I was controversial and thoroughly aggressive, and I did not get any nice comments afterwards, except from a then Independent Member of Parliament, Mr. Austin Hopkinson, who said, "It is the tradition of this House to congratulate an hon. Member on his maiden speech. Sir, I do so." Maybe it was characteristic of him, but I must say I deserved it, for it was not a very good speech.
The Chancellor this afternoon delivered a speech with his customary physical vigour, but I was rather disappointed that there was no indication and no announcement of Government action or policy to deal with this matter, except the appointment of the Independent Economic Advisory Committee. That is a new decision on the part of the Government which they have taken on their own responsibility, and I shall have some comments to make about that later on. I hope that the Prime Minister will indicate later whether this wilt have an effect on the work and functioning of the Economic Planning Board, over which Sir Edwin Plowden used to preside, because there is some relationship between the work of the two bodies.
I am glad that my right hon. Friends arranged for this debate to take place. It is on a subject of very great importance and, I think, considerable danger to our country. We are drifting. It is the drift of a hard-pressed nation, and it is for that nation that we should all try to speak today and advocate lines and views which we think are for its good.
The depressing thing is that nowadays we hardly open a newspaper without reading of increases in prices. It should not be assumed that all increases in prices are in nationalised industries. That is not the case. There are plenty of rises in private industry. Moreover, there are a lot of increases in private industry which are not mentioned in the newspapers at all, but they are nevertheless real. The value of the £ has steadily fallen. One keeps asking oneself "Where will it stop? How low will it go?" I do not think that any good British citizen likes the idea of the £ going down and down in value. We have seen that happen with other currencies, and we always feel sorry for the foreign countries where it happens. The position is becoming alarming.
The Chancellor was at pains to indicate that there was no crisis in the sense of a dramatic crisis, with things coming to a full stop. One must agree that there is not a crisis in that sense, but I think it is deceiving ourselves to say that there is no crisis in the economic and financial affairs of our country. The real point is that the crisis has become so continuous that we are almost tempted to think that there is no crisis because it is not sudden and smashing.

Mr. David Grenfell: It is slipping every day.

Mr. Morrison: As my right hon. Friend the Member for Gower (Mr. Grenfell)says, it is slipping every day. It is a continuous crisis, and a continuous crisis is, if anything, worse than a crisis which conies and then goes. Do not let us have any illusions upon that point. The balance of trade is sometimes better and sometimes worse, but if this situation of continuing inflation and continuing depreciation in the value of the £ goes on, then we are heading for a financial and economic crash. This is the business of the Government primarily, but it is equally our business, and we have a duty to make our contributions today. It is the business of employers and the business of the trade union organisations as well.
Let us first try to determine where the outstanding political responsibility lies. I recall the days of the Labour Government. We were determined—we stated it—that the country should not drift into a muddle. Although there were imperfections from time to time, although we had our spots of bother, and although there were lots of troubles going on all over the world, I say that the Labour Government faced and handled with conspicuous ability our economic problems following a great war in which there was much destruction, and that we carried through that transition from war to peace in a way that was creditable to the Government and also creditable to the British people, for without their co-operation ii could never have been done.
The proof of this is that if we compare the way in which we got through the troubles after the Second World War with the difficulties after the First World War, there is no doubt about it that the policy of reasonable control and direction, and,

if I may say so, some nationalisation as well, was right, and that the policy after the First World War of letting things drift, in which the Conservative Party would have engaged if it had won the 1945 General Election, was an error and a mistake.
We exercised control. We went in for bulk purchase, with advantage to the Commonwealth and, I think, to the stability of prices. We made a clear effort to hold prices. We imposed on the people, and asked them to accept—which, on the whole, they did—self-denial in respect of goods which were required for the export trade. We imposed import controls, and for the life of me I cannot see why we should not do so today in appropriate cases. If we import more than we can pay for, why do we not cut some of it down? Surely it can be done without all the troublesome things which are sometimes predicted.
We had our troubles, as I have said, and the wonder was that we got through as well as we did during that period. Nationalisation made its contribution. If the coal mines had not been transferred to public ownership, that basic industry would have got into a terrible mess, output would have fallen and trouble would have arisen in the mines.
We did not stop at physical controls. We also went in for the economic education of the people. We took a lot of trouble about it, and there was a response. The people did not know about the balance of payments, the balance of trade, exports, imports, and so on, to the degree which they might have done, and they had to be taught, and we took no end of trouble about it. We did good by educating the people in economic affairs. Sir Stafford Cripps and I and others went all over the country and addressed great mass meetings on the subject, and other means were adopted. One of my complaints is that the present Government have taken far too little trouble about the education of the nation in the economic facts of life.
As a result of all our effort to keep control of things and to ensure that things were fairly done, we were able to speak to the trade unions as friends and colleagues, as a Government who were making their contribution towards maintaining price stability and so on. The


trade unions responded, and we had a good deal of help from those quarters.
Then came the change in political direction. The Conservative Party came to power in 1951. I must say that both during the period of the Labour Government and during the period of the Conservative Government the Conservative Party put party politics and party dogma before the wellbeing of the country. The first Minister who contributed to this great change, which was deliberately made, was the present Leader of the House of Commons, who was the first Conservative Chancellor of the Exchequer after the departure of the Labour Government. All this took place after a long period of mischievous propaganda.
What did the Conservative Party say? It said, "Away with austerity," of which it had made fun when Sir Stafford Cripps was Chancellor of the Exchequer. When they say "Away with austerity" it means away with self-discipline, away with self-control. It is all part of their doctrine of "Look after yourselves. Never mind the country." They argued, "Down with controls." They argued, "Conservative freedom is best. Freedom for all to do as they like is the best thing for us." And they acted accordingly.
Even in that little matter of Independent Television there was a deliberate decision of an inflationary character wasting materials, wasting scarce labour, and encouraging advertising expenditure, and so on, in a way which is directly inflationary. Why? Because the Government had not the courage to resist the pressure of about fifteen Conservative Members of Parliament, quite a proportion of them interested in the advertising profession. That was deliberate action calculated to have an inflationary effect.
What were the consequences of this? The Government not only reversed the Labour policy which, as I say, as a whole was markedly successful in getting us through those post-war years—

Mr. Rupert Speir: Was it successful in keeping prices down?

Mr. Morrison: It really was. As my right hon. Friend the Member for Huyton (Mr. H. Wilson)said, at a time when world prices were in the process of doubling we kept them moderate. They did go up. That is true, and we have

never denied it, but the increases were relatively small. Under this Government prices have gone up to about the same extent. [HON. MEMBERS: "No."] Yes. They have gone up by about the same percentage—and at a time when world prices were falling. Moreover, the time when the Labour Party was in office was nearer to the end of the war, and then, in consequence of that, production in the world was less. The hon. Member for Hexham (Mr. Speir)is an example of the failure of the Government to go in for elementary economic education of the country.
As I was saying, the result of all this was that things got out of hand, that prices continued to rise, and they ought not to have continued to have risen at the rate they did. It also undid people's economic understanding. They have had very little education or leadership from Ministers. The inevitable consequence of that has been that the sense of social responsibility of almost all classes of the community has deteriorated, and that has been caused by the Government's lack of social morality in handling economic policy.
Let us consider the Trades Union Congress, which I know pretty well, for I am a trade unionist, although I have not had the great honour of sitting on the General Council of the Trades Union Congress. I have, however, sat on its Economic Committee as a representative of the Labour Party Executive. When this Government came in the leaders of the Trades Union Congress straight away said, "The Conservative Government are in as a result of an election. Therefore, we shall be willing to act with the Government, consult and co-operate with them, just as we were with the Government of another colour." It had some critics for saying it, but I think it was right and was public spirited. I know that it genuinely wanted understanding and co-operation between the T.U.C. and the Government of the day for the good of the country and the working people.
The Government's actions and policy have undermined the work which was done during the period of wages restraint, and responsible trade union leaders found themselves facing a losing battle against the increased attacks on the wages restraint policy when they were made at the Trades Union Congress and in other ways. I have heard the arguments at many


of their consultations. I think the turning point was probably the meeting of the Trades Union Congress held at Southport. There was a nice tip and run battle between the platform and the floor, and I think the platform just got through, but, despite the victory, one could see that the battle would lead to a reversal of policy within the next twelve months. I think that, perhaps, "reversal" is too strong a word, and I should say a "change" in policy.
Those men did not want to give up wages restraint. I know what their defence was when they talked to one another, let alone what their public defence has been. They argued like this: "What can we say when the Government are letting us down by this anarchistic policy of letting prices rip and deliberately putting some prices up?"
I used to sit on the Economic Committee of the Trades Union Congress. It really was an extraordinary body. As far as I know it still is. I have sat on a good many committees, including committees of politicians, but I have never sat on a better committee than that Economic Committee of the Trades Union Congress. I formed an enormous admiration for it and its members. I think that, like myself, none of them had had a university or public school education, but their quality in discussion and their ability in the end to arrive at an agreement was admirable, and their public spirit was fine. I often felt that those men could be safely left in charge of the government of the country and that they would not make a mess of it, at any rate because of want of knowledge or public spirit.
They wanted to keep stability. After all, the Labour movement has everything to gain from stability being maintained. However, this change took place. It was a change which followed the Government's decision to let things rip, the philosophy of "Look after yourselves."
Moreover, dividends were high and were going up, noticeably going up. I am not talking about profits out of which money is set aside for improving the capital equipment. That is very desirable very often. I am not talking of that; I am talking about dividends going up.

Viscount Hinchingbrooke: Which year was that?

Mr. Morrison: Nearly all the years. They varied. Sometimes they were more and sometimes less.
However, with prices going up and and dividends going up, it was inevitable that there would be a change of feeling in the trade union movement. It was a great pity, but it could not be helped in the circumstances. So wage claims became more frequent, and they became larger.
Now we have reached a new phase, and here we as Labour men and women have to ask ourselves a question, and we really must not hesitate to be frank and forthcoming about it.

Mr. Ellis Smith: We never are.

Mr. Morrison: I do not think we are.
The tendency is for the claims to become bigger and more frequent. Sometimes the trade union movement finds itself backing up the action of the rank and file delegates of the trade unions' conferences, when things get a little bit out of the control and influence sometimes of the official leadership of the unions. Therefore, it is not surprising that some people, including some trade unionists of standing, have asked whether we are outdistancing prices and production. They have also asked whether there is competition between unions. Because if one union puts in a claim it is not too easy for another union, especially if it caters for people in comparable jobs, not to do the same. I think there is now an element of competition.
I think the industrial and political leaders of the Labour movement have been right to criticise the Government, and we as the Opposition must continue to discharge our duty of criticising the Government when we think they are wrong—which will often be the case. However, having said that, I would say that it is not enough for us to criticise the Government. We are the alternative Government, and the country wants to know what our general attitude is. Moreover, we have to look ahead, and we have to try to influence the Government and their policy as best we can, and make our contribution. If the Labour Party is returned next time—and all the signs indicate that it will be—it will be a pity if our predecessors leave us with such a horrible muddle that we are faced with problems still stiffer than we anticipate


them to be. We must make our contribution now to save ourselves from such an unpleasant outlook. Therefore, we have to resume as a Labour movement an objective and honest education in the facts of economic life, whether it be popular to do so or not. That is our duty to our people and to the nation. The consumer is being largely forgotten. We as politicians ought not to forget him, because he has more votes than any other section of the community combined. In fact, he is the community. Politicians, trade unionists, and particularly, the Co-operative movement, which in a special sense can speak for the consumer, ought to be watching his interests.
The man who is working in the factory has to take account of the possibility of an internal, vicious, economic spiral. In a way, that does not matter internally, so long as the consequences are confined to the nation, but we have to consider the effect of rising prices on the export trade and on our balance of trade. A million unemployed could be produced directly if our export trade, which is so very vulnerable, were seriously hurt. Indirectly, if we could not afford to import raw materials for our industry it could cause another million to be unemployed. I do not want that to happen, because if it does the employers inevitably will resume their offensive against the trade unions and will try to have wages reduced. History bears me out that it has happened before, and it could happen again.
Increasing prices, moreover, are hurting particularly those who are on fixed incomes, including the large and increasing number of old-age pensioners who are feeling the squeeze very much indeed. We shall be debating that subject next week and I think that the Government will have to do something to improve the lot of old-age pensioners. That is very serious for the Chancellor of the Exchequer, but in the circumstances of these people it is inevitable.
All these matters affect our standing in the world, to which we must give attention. We have got into the habit of assuming that full employment is here and that it will last, but full employment is not safe. I hope that it will remain, but it can be lost. We can go back to the miserable days of the 1920's and 1930's, which were brought to an end for the time being only by a war. I do

not want a situation in which we can secure full employment only in a war or immediately thereafter. Therefore, we Socialists are right when we demand that nationalised industry and private industry must be social-minded and that, if necessary, directions will have to be given to them. Working people have a right to fair wages and a decent standard of life. They have a right to their share in economic progress and increased productivity.
We and the unions must be Socialist in outlook, because Socialist philosophy applies to the trade unions as much as to anything else. I want the unions to have a good social outlook on their problems. Let us not encourage within the trade unions a free-for-all competition with each other. It should not be assumed that arbitration in a trade union dispute is a sin. It has worked very successfully in a number of cases, though one side or the other does not always get the result that is wanted. Incidentally, hon. Members have noticed on the tape that the recommended wage increase for the busmen is 11s.

Mr. Ellis Smith: A lot of trouble could have been saved.

Mr. Morrison: We cannot condemn arbitration as a principle in trade union affairs. After all, we have always supported it with vigour in international affairs.
There is need to argue the economics of the situation. Employers should encourage joint consultation between managements and workpeople. They have not always done so or done it in a generous and forthcoming spirit. Joint consultation and the laying of the facts on the table are ways of securing a better spirit in industry and of getting increased productivity as well. The Chancellor has declared that the Government propose to go ahead with an economic tribunal.

Mr. Pickthorn: Not a tribunal.

Mr. Morrison: A committee—call it what we like, it is much the same. I do not know whether it will secure the great results that the Government imagine, but it is the fact that one distinguished trade unionist, Mr. C. J. Geddes, a former chairman of the T.U.C., was one of the signatories of this proposal. I do not think that this is the best way of tackling


the problem. I like the Swedish idea. Employers and trade unionists in Sweden have an annual contract, lasting twelve months and ending 31st December, so that all contracts come to an end at the same time. It is true that there the trade union movement is more simply organised in industrial unions.
Well before the contract comes to an end, each constituent trade union notifies the Swedish T.U.C. of intended claims. The Swedish equivalent of the T.U.C. General Council then meets and discusses the claims of the various unions. It tries to reconcile one claim with another. The result is an elimination to a great extent of the competitive element and a greater degree of wider thinking and discussion about the problem, together with a study of reports on the Swedish economic situation. The employers also sometimes meet together. This idea is worth thinking about as a means of securing more co-operation and more responsibility in industry.

Mr. R. J. Mellish: The idea is also backed in Sweden by a good Socialist Government.

Mr. Morrison: I quite agree. There has been a good Socialist Government there for some time.
A third idea, which cannot be put forward as an immediate remedy. is Lord Beveridge's proposal in favour of the appointment of a Government committee to examine the problem of inflation, to get the facts about it and to endeavour to produce a helpful report. As the noble Lord points out, there was a time when people believed that there was no remedy for unemployment and that full employment was an impossibility. No doubt the reports of various committees, from the Poor Law Commission onwards, have given us helpful guidance and proposals. Therefore, there is something to be said for that idea. Though it should not hold up Government action in the meantime, it is worth thinking about.
This is the situation as I see it. We are facing very grave difficulties and problems which will require efforts on the part of the Government themselves to be more social-minded and to encourage others to be the same. They will require all our efforts to help in the economic education of the nation, including the Labour movement.

6.40 p.m.

Sir Peter Roberts: I was interested to hear the right hon. Member for Lewisham, South (Mr. H. Morrison)going back into the past and patting himself on the back. The only criticism I would make is that he seemed to be a little biased in his own favour. He did not mention the dollar loan which aided the Labour Government so much for such a long time.
Turning back to the debate, I congratulate my right hon. Friend the Chancellor of the Exchequer on what I consider to be a bold and courageous speech, and one which I think will be well received in the country tomorrow when it is read. My right hon. Friend gave a lead to both sides of industry as well as to this House.
There are one or two other matters which I believe the Government should take into consideration, because in considering this problem we have to look at its cause. One or two points stand out clearly. The first is that some inflation in our present economy reflects full employment. We want to maintain full employment, and as long as we do we must expect a slow, steady pressure of rising prices. Secondly, a rising standard of living will also be reflected in an increased demand for goods, and as a result there will be a tendency to increase prices.
As we want to maintain both full employment and a rising standard of living, it is inevitable, whatever Government may be in power, that we shall see some form of rising inflation during the years, although it must be a controlled inflation, because full employment and a rising standard of living are two flowers which we want to maintain in our garden. At the same time we have a number of weeds, though one weed we have not got is the fear of galloping inflation, about which we have heard something. I do not believe that at the present time we are contemplating the problem of the billion mark note, the runaway inflation. That relates only to a country that has lost its assets or has become bankrupt, it does not apply to our country at present.
So having said that some form of inflation appears to be inevitable, although runaway inflation is no danger at the present time—

Mr. Cyril Osborne: The Germans thought the same thing.

Mr. Pickthorn: Famous last words.

Sir P. Roberts: There are a lot of misconceptions about it. To my mind, the present inflation is caused primarily—and this has been brought out during the debate this afternoon—by the powerful demand for more wages backed by a strong trade union movement. I am not necessarily complaining of this, but I believe it is a fundamental fact. If we look at the amount of the national income which the wage-earning classes have received over the last ten years, we shall find that relatively this section of the community is better off than are the other sections whose share of the national income has gone down to some extent.
If, therefore, one section of the community has had a greater increase in its share of the national income, it obviously means that another section must have had less. For instance, the share of the very rich has obviously come down, but they are so few in number that it does not affect the economy one way or the other. Then there are the people living on fixed incomes, such as the holders of fixed-interest stocks and pensioners. It is to those people that the Government must primarily direct attention at the present time.
Reverting to the question of the increased part of the national income which the wage earners have received, I believe that is a good thing so long as it is related to productivity. For instance, I believe that Sheffield has never been more prosperous, relatively, than it is now. I do not think that is unusual also in a number of other big industrial towns in the north. Also, I do not believe that it will be possible to reverse this tendency or that the trade unions would allow it.
There is one danger that must be recognised by both sides of the House, and that is when political motives enter into the wage demands. I believe that recently we have seen some of that injected by the Communist Party. It must be watched carefully, because once wage demands have such a political flavour, and become divorced from economics, the situation can become very dangerous indeed.
In addition, during the last ten years of which I am speaking the Government have stepped in and have reduced direct taxation for a large section of the wage-earning population about which we are

talking. Both Governments have done it, with the approval of all sides of the House, but it has been another step towards the present disequilibrium.
Now I turn to a point which I want to make to the Chancellor or to my hon. Friend. If the Government are to be fair to all sections of the community, which I am sure is our intention, now has come the time when they must help those people in the fixed income groups, the professional and salaried classes and the pensioner classes. The easiest and simplest way in which the Government can do this, first for those who pay direct taxation, is by a reduction in Income Tax. That is the most easy and essential thing to do. In the case of those who do not pay Income Tax, the pensioners and others on fixed incomes, there is no doubt that in the next few months some added assistance must be given to them.
Let us take direct taxation first. I have been listening to this kind of debate in the House of Commons for just over twelve years. During this time the theory has been advanced that direct taxation is anti-inflationary. I think it was the late Sir Stafford Cripps who first used the phrase "creaming-off surplus spending power."

Mr. Osborne: Syphoning.

Sir P. Roberts: Syphoning off. That is a deeply ingrained idea held by economists on either side of the House and, I believe, by the Treasury. With respect, I believe it to be wrong. Direct taxation in itself is inflationary, and one of the difficulties which the right hon. Gentleman the Member for Huyton (Mr. H. Wilson)was finding throughout his speech was that he would not face up to the fact that the heavy taxation imposed by his Government—and still being imposed though not quite so much by our Government—is the root cause of the inflation from which we are now suffering.
In my opinion, there is a high direct taxation content in the ordinary price of goods. I will explain what I mean. In the capitalist State, as we have it, the manufacturer or the producer who has to invest in capital must expect some return on that capital investment, and a net return of between 5 per cent. and 7½ per cent., depending upon the risk,


does not appear to be excessive. Nowadays, however, when we have direct taxation on Income Tax, Distributed Profits Tax and so on, up to 50 per cent. or 60 per cent., it means that a company whose ratio of turnover to capital might have been one for one, in order to get the 5 per cent. or 7½ per cent. now, has to add on to the cost of the product 15 per cent., and in that 15 per cent. there is at least 5 per cent. or 7½ per cent. of direct tax content. When that is multiplied through all the various sub-components of a finished article, a motor car or a television set, the total amount of direct tax in the final price is considerably higher than most people think.
Therefore, if we could attack this problem by reducing taxation in that way it would have the effect not only of helping people in the income groups we want to help, but it would also have the effect of bringing down prices. The Government should approach industry and industrialists with the suggestion that if such a reduction of taxation took place they should use it in the reduction of prices. That is a possible form of argument which the Government could produce. Even if industrialists did not agree, competition by itself would bring prices down.
What sort of amount is necessary? A reduction of 6d. in the standard rate on Income Tax is not tackling the problem. To make an impact we have to have courage and to think of a reduction in terms of 2s. in the standard rate, graded down in the lower rates. At present rates that would cost £540 million, and if we gave something extra to pensioners on subsistence level—because the two go hand in hand—one would need another £60 million, so we are trying to find a total of £600 million.
This is more simple than it appears. This afternoon the Chancellor talked about Government savings. When the Minister of Defence first took office we had a saving in defence. There is still much to be done, and some of it must have been whittled away over the last three or four months. I am one of those who believes that peace will come through the deterrent of nuclear weapons and that we can rely more and more on that, thus reducing conventional weapons.
Further economies can be made in Government Departments. I sometimes

think that Ministers seem to be frightened of civil servants. Perhaps Ministers are moved from one Department to another so quickly that they do not have an opportunity to get down to considering possible economies. A permanent commission of Government supporters might well be useful for considering that form of economy. I believe that by savings in defence and otherwise it is possible to effect a saving of at least £300 million.
The second half is gained from the Government surplus above the line. The Government surplus above the line is neither necessary nor desirable. The full estimate for 1957–58 is £560 million—enough in itself to cover the whole of the 2s. reduction to which I have referred. One would not need it all. It is far better for the private individual to save rather than for the Government to save compulsorily with public savings. I do not expect hon. Members opposite to agree with me, but I do expect agreement on this side of the Committee.
I have recently been to the United States in my capacity of Master Cutler. I discussed this topic with United States economists. United States productivity has increased considerably over the last six years. During the first four years of that period the United States was running on a deficiency. It is only in the last two years that the United States total net figure has moved into a surplus. The Americans were operating on a deficit for those four years and yet during that time there was a great increase in their production. This Budget surplus is neither essential nor necessary, and it would be far better used for reducing taxation, as I have said.
Irrespective of what one does with taxation internally, the world must have confidence in our economies, must have confidence in Great Britain, confidence in the Commonwealth and confidence in the sterling area. One of the best ways of combating inflation is by further investment in this country, and investment means production and production takes care of demand. The United States has been a user of investment and capital for many years, but it is now changing and becoming an exporter of capital.
The investment of United States dollars in this country over the next ten years can help our standard of living considerably. I was making this sort


of case in New York last week, and I was very disappointed with the Labour Party's announcement about nationalisation, renationalisation and a whole gamut of political interference with investment. With the example of Mr. Peron and Mr. Nasser, investors abroad are very wary of going into countries where politicians have nationalisation phobia. It is doing no service to this country, and anyway it is out of date and out of place to talk about renationalising, for instance, the steel industry or the road transport industry. The Opposition are doing no good to themselves or to the country by reiterating those out-of-date theories.
If we implement Conservative principles, if we reduce taxation, thereby reducing prices and increasing the standard of living of the fixed income groups, if we encourage private and not public savings, and if we use the nationalised industries to hold basic prices—and one of the advantages of nationalised industries is that they can be used to hold basic prices, something not done sufficiently in the last year or two—we can go forward to build a sound and rising standard of living for all sections of the community.

7.7 p.m.

Mr. J. Grimond: With a great deal of what the hon. Member for Heeley (Sir P. Roberts)said about the reduction of taxation I whole-heartedly agree. I also agree about the possibility of making good by reductions in the armament programme and by administrative economies in the Government. However, he sang a rather dangerous siren song about controlled inflation. The forces making for inflation in a democracy today are so strong that it is dangerous to feel that one can control them by having a little inflation. What may begin as slow inflation can easily become fast. Inflation is the greatest danger facing democracies all over the world today.
I do not share the belief of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson)that democracies have now learned the technique of planning investment and the general economic system so as to maintain a level cost of living. We certainly hope to get to that stage, but we have not yet done so. Some

of his suggestions were reminiscent of Dr. Schacht and of devices which, in a system which was not democratic, might have been valuable for getting over the difficulties of inflation.
When the Chancellor was speaking, it seemed to me that we were driving along in the same old coach in which we had been for the last four or five years. Certainly, we have not solved the problem of inflation in those years. Now, it seems, we are to get a fifth wheel to this coach in the form of the Council which is to give general advice on what is happening. At the end of the Chancellor's speech, I was still in doubt about whether this Council was to be a propaganda machine or a sort of instrument for education in economics—of which the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison)spoke.
If it is not to be merely the latter, what happens if it wants to express a view quite different from the Government's view? That may well happen. There will not necessarily be agreement about what the Governmetn should do. Is this to be a Council attempting the difficult if not impossible task of arranging how to have one's cake and eat it at the same time, how to have painless inflation without hurting anybody? Will it not be trespassing on the duty of the Government? It is for the Government to make decisions on economic policy. I do not feel that this Council will be of a great help in meeting our problems.
The Chancellor said that wages had added about £800 million to consumption in the recent years. He spoke as though that was something generated by trade unionists out of the air. Of course, all these wage increases have been granted by industries which, in spite of them, have made large profits. I cannot blame trade unionists for demanding more and more wages. Although we have all cried "wolf", "wolf" has not arrived. At the end of the old story, the wolf did come. It probably will come to us, because we are a great international trading nation and we cannot isolate ourselves from the world: but it has not come so far.
It is very dangerous when the Chancellor gives the impression, as he gave this afternoon, that inflation is outside the control of the Government. In the last resort he controls the credit and the currency of this country. We know that


he cannot use that control in as drastic a way as might seem possible at first sight. He is subject to democratic pressures, but he is the ultimate controller, and it is important for the morale of the country and a proper understanding of the problem to appreciate the fact that in this sort of society the ultimate control rests with the Government.
Let us look at the industries under the Chancellor's direct hand. While the credit squeeze has been going on, advances of £243 million have been made to the nationalised industries. The transport and coal industries have been allowed to run up deficits of £140 million between them. We have never been told how this fits in with the general pattern of the economy, or what the Government intend to do about these mounting deficits.
Today, we stand facing the possibility of a severe wage-cost inflation, which will grow worse as recent wage increases work their way through the economy. It is true that production is rising, but not as fast as wages. What I think is sinister, and what has not been emphasised enough, is that our resources are still under-employed. In this connection, we are all apt to be rather bemused by the unemployment figures. With our conditioning to the pre-war world of mass unemployment we are apt to think that if there are not a great many people on the unemployment register all is well.
But there is serious under-employment in industry today—under-employment of capital and labour resources through restrictive practices: through managements hanging on to men they do not need, or people being kept in industries in which the marginal productivity is not as high as in other industries to which they might move, and because of National Service and strikes. Strikes are very alarming when you look at the number of man-days lost this year.
The curious aspect of the situation is that while we have a wage-cost inflation which should be generating an increase of consumer goods and, through consumer goods, of investment goods, we still have under-employment. The Government, although they have not said so, probably have in mind the thought that there are certain deflationary tendencies at work. Commodity prices are falling, and that has traditionally been a sign of

coming deflation. Some countries are in financial difficulties and, presumably, demand will fall off there.
Then there is the possibility of the Free Trade Area, and special situations arising, such as the cancelling of the arms contracts and the new regulations for the jute industry in Dundee. These are all deflationary and part of the reason why production has not risen as fast as one might have thought. But they are not the whole reason. If we look at other countries we see the same pattern emerging, although it is moving at a different pace. There is a wage-cost inflation, but not as large an increase in production as in recent years. Some of that is no doubt due to the fact that countries could not keep up the pace of the immediately postwar years. Throughout the free world, production is tending to slow up.
If the Government want to set up more committees—which I do not much favour—they might see whether they can set up an international committee to look into economic and financial policy on the international level. The whole Western world is facing the difficulty of creeping inflation and also the need to make the utmost use of its resources. If we are going into the Free Trade Area of Europe and are to take part in a Pan-European movement it is important that the basic economic policies of the various countries of Europe keep in step. The same is true in the Commonwealth. If we are going on running the sterling area and keeping Commonwealth balances in this country, the Commonwealth countries and the Colonies are bound to demand a bigger say in the way in which we manage sterling.

Mr. Osborne: Surely the O.E.E.C. and the North Atlantic Community give us plenty of reports. We do not want more.

Mr. Grimond: It is true that they give us reports, but we may require new institutions, new financial organisations. This may be necessary, especially if we are going further with the European movement.
What is vital to our internal position is to call back into production all our potential without letting loose a new flood of money and credit which will be inflationary. Our main obstacle is a lack


of confidence in the country towards Governments and also in industry itself. Let me give an example of what I mean. There is no doubt that unproductive Government expenditure is inflationary. There is a powerful demand for further economies in Government expenditure. Ordinary people are not at all convinced that those economies could not be made. They see plenty of examples where they think economies could be made. The Government are always saying that they will make these economies, but how will they do it? They have not very much time left.

Mr. Arthur Moyle: The hon. Member has referred somewhat airily to one or two matters without going into definitions. He has referred to restrictive practices among trade unions, but he did not give particulars. Now he has referred to Government expenditure. In what particular way does the Liberal Party propose to act?

Mr. Grimond: I do not think that there is any doubt that restrictive practices exist in industry. The printing industry, with which I am familiar, is full of them—on both sides of the industry.
Then there is the question of Government expenditure. The hon. Member for Heeley referred to defence expenditure. There is the question of the staffs of the Colonial Office and the Foreign Office and, for my part, I notice the number of inspectors who come to my constituency every summer. All I say is that the public are not convinced that more administrative and general economies could not be made.
Secondly, there is the question of the nationalised industries, which are under the hand of the Government. The capital commitments of these industries are in excess of £5,000 million. That may be right or wrong, but I am sure that no one in this House can be satisfied that the position has been examined by the House, or that we have had those commitments justified, on commercial grounds, as representing the best use of our resources. Then there is the vexed question of the deficit which these industries are piling up. Some Government must tell us, some day, what is to happen about them.
Then there is the question of wages in the nationalised industries. We are told on all sides that wages should be linked in some way with productivity. It is agreed that this is a difficult thing to do, but we have had various suggestions. And the right hon. Member for Lewisham, South suggested that we could have a contract running for a year. I should like to see the Government develop a more coherent wage pattern in the nationalised industries, and try to relate wages more directly to productivity. They could also try the sort of contract which is a common feature of industrial relations in America—a contract between management and labour which runs for some time.
Lastly, there is the question whether the Government will be able to defend and save the currency. My feeling is that what with Premium Bonds and the latest proposals of the Labour Party—which all seem to assume inflation—confidence in the currency and the value of savings is being undermined, which could be disastrous if it spread much further. I am not sure that Ministers do not make the situation worse by giving continual warnings against inflation—by mentioning all the terrible things that will happen if it comes—and then admitting that it is with us. I do not wonder that people say, "We had better get out of sterling." This atmosphere of uncertainty will increase as the Election approaches and may become progressively more serious, because I doubt whether we can stop a flight from our currency, once started. We may be able to do so if we take dictatorial powers, but once such a thing is started it will be difficult to stop by democratic means.
In industry itself it seems to me that a very strong contributory cause of inflation is the pulling of owners and managers against the workpeople because they feel that they have different interests. Until we take steps to give them the same interests we shall have this pull on one side or the other for higher profits or higher wages. Throughout this debate we have continually had expressions like "industrial war breaking out again" and other metaphors taken from war. In the first five months of this year we lost 7 million working days through strikes, whereas in the whole of 1955 we lost less than 4 million.
Various methods have been urged on the Government for improving the situation, for example not only consultation at all levels, which is extremely important, but also the spread of ownership. I do not want to go over them all, but there is co-ownership and there have been other suggestions. I would draw attention once again to the suggestion that the Government should give positive encouragement to the buying of shares in trust companies in quite small amounts by workers in industry.
I know that there are difficulties, but some Government can overcome and the difficulty of expense can surely be met. The Stamp Duty can be repealed, we recognise the expense of handling small packets of shares, but surely the Government could consult the Stock Exchange, the Post Office and big industry to see whether this difficulty cannot be overcome, and whether a campaign to interest the workers directly in the ownership of industry cannot be set under way and shares sold, perhaps through post offices.
Another factor which causes lack of confidence is the old fear of unemployment. It was said in the Daily Telegraph today that it hangs over industry still like a black cloud. That is true. Should we not examine the question of amending the unemployment regulations to make it easier for people to move if they lose their employment? Should we not make retraining easier? Have we not reached the stage when a skilled man in industry must have some form of compensation for loss of office? We have it at the managerial level. I do not know how far we can insure against that, but if we are to take advantage of new techniques and of our huge investment in employment we must get rid of the fear of unemployment.
We are told that we intend to pay officers in the Army large sums of money because of the ending of their careers. I agree with that; I am all in favour of it. If we do it, surely there is at least a case for examining whether we should not extend this principle into industry.

Mr. Henry Usborne: Is not there at least one obvious case where it could be done? It is the custom in most industries that members of the staff have to be given one month's notice. Would it not be perfectly fair to extend that to all members of the firm?

Mr. Grimond: I think it would. It is the sort of method by which one would increase mobility and give a person a feeling that, at any rate, he will not be thrown out of his job and house quite suddenly through a change in technique or merely through a falling off in demand.
There are plenty of other suggestions which could be made, for instance, Treasury deposit receipts and fixed ratios. But the big problem facing the country today is that of getting its resources fully employed and yet keeping currency and credit in step with the process, so that we do not necessarily have rising prices.

Mr. Arthur Lewis: Before the hon. Member leaves the argument about co-partnership, may I ask whether it would not be a good thing for the Liberal Party to try this in the News Chronicle, in Cadbury Bros., Rowntree & Co. and Fry & Sons, and all the big industrial concerns which they control? While they probably have not the chance of becoming the Government, why do they not set an example?

Mr. Grimond: They might if they did control those firms. I am in favour of these things. In fact, this principle is spreading throughout industry. That is exactly what is happening.

Mr. Lewis: But the Liberals are not doing it.

Mr. Grimond: Indeed they are. It is happening all the time in industry and a pioneer of it was Mr. Taylor, a Liberal M.P. All I say is that it is a very healthy development. I must finish now, however, because I have continued for too long.
I feel that the fundamental problem is to get full production without galloping inflation. I do not think that we shall achieve that until there is a common interest in this country and until workers and management pull in the same direction. In my opinion, there are ways in which that can be done, but I do not think that it can be done by setting up more committees. Already, we have unions, employers' federations and similar organisations. I doubt, too, whether we can achieve our aim by any quick turn of the wrist in technical management of the currency.
I agree that in a democracy it is difficult for the Government to take a firm line towards inflation, but today the Government might have indicated that they would do much more than they have suggested.

7.25 p.m.

Mr. Kenneth Pickthorn: I am very glad to follow the hon. Member for Orkney and Shetland (Mr. Grimond)because I think that for the first time in my life I very largely agreed with what he said.
It is always difficult, and most particularly in this sort of debate, if one sits in the Chamber for four or five hours before one rises to speak, still to remain convinced by that time that any of the things one means to say are still worth saying. I consoled and cheered myself a little by remembering Clemenceau's principle that war was too important to be left to the generals. I think it may not be unreasonable to think that economics are too serious, and at the same time I would make so bold as to say too simple, to be left to the experts. Certainly if the experts cannot make them a great deal simpler than they have made them recently, it becomes in the strict sense nonsense to talk about democracy.
It is important to be clear, first, about the facts; about the policy which the Government are pursuing and intend to pursue; about the areas in which they can operate, and how"—
and I take that in its English and not American sense. I hope that the House will have recognised the words of my right hon. Friend the Chancellor of the Exchequer. On another occasion, a day or two sooner, he said:
This nation must either squarely face the problem of inflation and accept the policies necessary to check and curtail it or else it must face a continued decline in the value of its currency.
I want to invite the House to consider a little what is the problem of inflation. I do not propose to give the answer to the problem I will do that on a later occasion if it should still be desired that I should. I want to begin by persuading right hon. and hon. Gentlemen that they ought to make up their minds what is the problem of inflation. Is it to "check and curtail," or, as my right hon. Friend the Prime Minister said, "can we control?" Again,

I am not quite sure what he meant by control. Did he mean, make sure that there is no more inflation, or did he mean make sure that the rate of inflation does not quicken? I think that is a fair question to ask him. Or does control merely mean control in the French sense, ticket inspector, "contrôleur"—to see where the thing is going and to check it up in that sense?
I would venture to suggest that everybody agreed, more or less, with the Chancellor's view that we have to "face this problem." Surely everybody is thereby authorised, and I would say absolutely obliged, to ask Her Majesty's Government, to a less extent to ask the Opposition, and as far as possible to ask the experts, what they think is the problem of inflation? Is it to stop it? Or is it that it cannot be stopped? Or is it that it need not be stopped? Or is it that it should not be stopped? Or is it that it should be more or less willingly accepted at some rate which perhaps we cannot make precise, although for the sake of argument I offer the figure of 3 per cent. per annum. Which is the victory in the battle against inflation or the victory in what my right hon. Friend the Chancellor of the Exchequer, with his gunner's natural feelings about not wishing to be surrounded, called a war on several fronts against inflation? If we do which of these things shall we have victory?
I make no apology for asking the question out loud, because I am sure that if the right answer is not given, and given convincingly, then the worst result becomes very much more likely. What is thought about the clearness of the Government's mind and the firmness of its determination in this matter is one of the greatest factors in this problem. From what we have heard, and on the whole accepted, from the Chancellor of the Exchequer, and still more as it was reduced to parody by my hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts)was: "This inflation is a very nice thing. It goes along, and wages go up and up, while steelworks become more and more valuable. There is no reason why we should not use these very agreeable facts to abolish taxation."

Sir P. Roberts: That is a slight exaggeration of what I said.

Mr. Pickthorn: Nevertheless, I think it is a perfectly fair parody. I have put


it much shorter and in a rather more memorable way. It was hardly less than complete nonsense, and my hon. Friend made the poor Chancellor of the Exchequer look slightly absurd.
If we are not to get the right answer, we may take it for granted that anything less than the right answer certainly means something not much better than 3 per cent. per annum. Either the right answer is clearly and firmly given or the 3 per cent. per annum answer must be taken to be the effective answer. I would ask the House to consider that point for a moment. In passing, we note the doubt whether creeping inflation can in fact go on for long. When the gaff has been blown, can it go on? Can it go oil creeping?
My hon. Friend the Member for Heeley is not here now but he said that it was a good thing that individuals should save instead of the State. How does he propose to cause individuals to save when the rate of interest is effectively negatived? I mean for anybody who puts his money into anything except my right hon. Friend the Prime Minister's "gambling" medium. In those one may win, whereas with all the others one is bound to lose.
How, in those circumstances, does anybody suggest that the individual is to be led into saving? I have spoken on National Savings platforms, not very often, not more often than I could help. When I have spoken I have said nothing that I did not think was exactly true. It still is true that if people stop saving and stop putting money into gilt-edged, we shall all be the worse off. If only all the mugs did it and all the wise boys did not, that would be much better for the wise boys. That is a matter which is the Government's responsibility and which the Government have to see stopped.
Do we know, if we are to have this 3 per cent. inflationary world, how the Government will behave in it? We do not know. We do not yet know, and we are bound to ask more questions. How will the Government persuade people to lend money? The Chancellor said he was not worried about gilt-edged. I have always been taught that only very good men and very wicked men did not worry. I do not know which of those the Chancellor is, but I am glad he was not worried; but he ought to be deeply concerned, especially when we remember

my right hon. Friend the Prime Minister's remark that "we must save to insert."
Why then save in the form of money, British currency, if investment is only to receive negative interest? I am sorry to say these things, but it is high time that they were said, and it is on the whole important that they should be said from this side of the House. It is great impudence for hon. Members on the Opposition side to come near the subject. When we look back and remember the right hon. Doctor and his issue of something which is now worth under £30 instead of £100, and other things, it is both impudent and silly that they should come near the subject.
Does my right hon. Friend doubt that the only way in which he can exert any lasting influence upon gilt-edged prices will be by ending depreciation of the currency? That is a fair question to put. My right hon. Friend has said that he had his "old faithfuls." I am sure that he counts me among them, and I am sure that it is not overstretching the privilege of an old retainer to hope that this question should be answered: Is there any way of exerting lasting influence on gilt-edged prices except by ending depreciation of the currency?
Nor does it stop with public finance. I do not see how commercial finance is to work even if we can hold depreciation to 3 per cent. per annum. What is to happen to debenture and preference shares? I do not know, but it will make a very considerable difference to the financial management of industry. If the difference is the result of Government action or want of action, then the Government should think ahead what they suppose would be the result and what ought to be done to minimise such of the results as they might not think desirable.
The difficulty is not only the concern of those who may have money to invest, but also of those who have not any money to invest, who have nothing except their expectations from the Welfare State. They now know what inflation is. I wish the right hon. Member for Lewisham, South (Mr. H. Morrison)were back here. We could have joined in singing, "I can't forget the days when I was young." We might have done a Marie Lloyd dance at the end. The right hon. Gentleman very nearly did it, all but singing the tune.


He talked as though he had taught economics to England if not to the world.
As for teaching, I too am bound to plead a little guilty to my constituents. I cannot say I have taught them how or why inflation happens or how it should be stopped. But I have never, I think, spoken in my constituency without talking about inflation. What is to happen to all these people who now recognise it? Are there to be always queues outside every Ministry to put their claims for readjusting their expectations from the State? There are the teachers, superannuated or about to be superannuated; the aspirants for so-called "teachers' training colleges"; the students, so-called; the civil servants, central and local; the State employees, direct and indirect; Ministers and Members of Parliament. In this happy world in which inflation is to go on and on all the time, is there to be a queue of these people outside every Ministry? If so, ought we not to have an appointed season or something of that kind? Otherwise, it will be intolerable for Ministers and their Secretaries. We ought to know. Almost everybody, outside Sheffield, has a very deep suspicion of what will happen to the £ till some Government risks its neck, religiously doing their duty to stop it.
We all know what inflation is. The old-age pensioners know and they are all used to having it put right, more or less every now and then, according to the chances and changes of politics. They are beginning to think that that is not good enough; and it is not. They are beginning to think and to insist that if inflation must be taken for granted, so must their gang's right to a guaranteed readjustment. That is what is beginning to happen.
What about the Sterling Area? My right hon. Friend the Prime Minister said the other day that British influence was as great as ever. I hope he is right. It will not go on being so if the Sterling Area is not preserved. How can the Sterling Area acquiesce, if I am right that the answer so far indicated is something like 3 per cent. depreciation per annum? How could the Sterling Area acquiesce in that? As for united Europe they are surely not going to acquiesce. The Germans are very nearly as intolerably foolish about trees as the English are

about dogs, and they are very nearly as pathologically frightened about inflation as the English are about unemployment. We are not going to go into, or halfway to, any consortium with West Deutschland on this basis. It is not going to happen.
How long can the City survive with a rotting currency? I hope that no one will tell me that this is crying stinking fish. There are very good noses on Wall Street and very keen ears in Zurich and these phenomena and their natural consequence are all well-known there. I hope that no one will tell me to go back into the twentieth century with Dr. Schacht and Ivor Kreuger. The earlier centuries understood simple arithmetic and even simple morality.
The last part of the subject to which I want to draw the attention of the House is this. I think that no one will accuse me of generally being a moraliser. I hate moralism in politics. I think that few things have done more harm, particularly to hon. Members on the other side of the House than the awful itch to turn every question of convenience and compulsion into a great moral question. I hope that I shall not be accused of having very often done that. But this thing does come to a point, and I think that however much we try we cannot stay very far away from doing that.
I have not yet said anything about world trade, but perhaps I can leave that out. It is no guarantee to our country, and it is only a very partial consolation to our party that the alternative is very much worse. The Socialist Party always was, is, and so far as I can guess always will be inflationist—and if it comes into office once more that will be the end of it anyway. It can hardly be that any of them now really think that the price of that pleasant vice can be avoided by tricks, restrictions, controls and subsidies. That one is out. The old age pensioners and such are not going to be taken in by that.
The Labour Party broke its back on inflation. Its claim that it was deliberately planning economic expansion was belied by recurrent exchange crises; prices rose continuously and taxes had to be kept at a level which angered the middle class and even the skilled workers.
I hope that hon. Gentlemen opposite agreed with that. It comes from Mr. Thomas Balogh in the New Statesman. [Interruption.] Hon. Members opposite


must not jeer at Mr. Thomas Balogh. They must not slip into racialism. They are surely not going to shuffle him off as good enough for the Maltese. They are too closely tied up with that one. Perhaps that is enough for them.
Now I come to the last part of what I want to say. The opinion has got around—there is no doubt about this, and this is certainly not crying stinking fish—that Her Majesty's Government have called off or suspended the battle against inflation. If they still mean what they did mean and what I have always meant, they will get rid of that opinion. How are they going to do it? How are they going to do it? I would say this to them among other things which might perhaps cheer them: let them not despair of help from opposite. I have heard people lately, more than once, using horrible words like devaluation and coalition, which I regard as the dirtiest of all words in politics, because it always means the wide boys versus the mugs. When I say to my right hon. Friend, "Let him not despair of help from the other side", it is not in that direction, coalition, at all that I am looking. This is the direction in which I am looking. We have been told on authority—authority recognised by hon. and right hon. Gentlemen opposite—that they descend more perhaps from Methodism than Marxism. Looking at them it seems about an even chance. I do not think that many of them ever understood Marxism. That is a compliment to them because neither did I nor anyone else. I think that it is nonsense. And I think that almost all those of them who had the tradition of Methodism have forgotten it. They have forgotten, especially, the sense of sin. They have been too much given to thinking that all men can be made happy by all men compelling all other men. That is not how it can be done. The reason that men are unhappy is because they are all miserable sinners. I think that they have rather forgotten their principles. What I have just said is a short definition of Socialism. I think they have rather forgotten their Methodism, but I hope there is enough still there for me to appeal to a little of it.
What does inflation mean? Always Governments are tempted and like to see the value of money go down, slowly, because the Government are always the biggest borrower. When it gets to the

point where everyone sees it and knows all about it and where all talk at tea tables and directors' board meetings is about what is going to happen to Income Tax next week and what is going to happen to inflation the week after next—when it comes to this stage it is a gross and may be a mortal vice. It means that people who borrow, especially the Government who are in a position to do things by compulsion, mean to pay back with something worse than that which they have borrowed. If a neighbour borrows a lawn mower meaning to pay one back with a worse lawn mower one's wife does not again ask his wife to tea. And she is quite right.
We may pray to Omnipotence to forgive us our debts as we forgive our debtors. We may; but we clearly cannot when at the same time we resolve that our creditors shall never be paid in full. That makes the prayer a little difficult. We all need some blessing.

Mr. Scholefield Allen: The hon. Member.

Mr. Pickthorn: The hon. Gentleman must not assume that I am not serious because I am not dull; nor assume that he should be heard because he has the itch to be facetious. Who more needs blessing at this moment in the middle of the Twentieth century than those who care about the employment and the prosperity of the masses of this country? We have been taught to pray that our debts may 'be forgiven as we forgive our debtors.
I had most need of blessing, and Amen Stuck in my throat.

7.49 p.m.

Mr. A. J. Irvine: We have just heard what really, on the final analysis, was a cry of despair. I listened to the speech of the hon. Member for Carlton (Mr. Pickthorn)with a great deal of pleasure even so. It was a stimulating and unexpected treatment of the matter, but I think it bore very little relevance to the practical questions people are asking outside.
I heard the hon. Member intervene in the course of an earlier speech of an hon. Friend of his to say that he was uttering "famous last words". There has been very little sign of cohesion on the part of hon. and right hon. Members opposite on this matter, very little sign of agreement among themselves and very


little mark or indication of any constructive policy at all. There is no more important matter in politics than that some party and Government should discover what the answer is to this problem—this persistent problem—of the decline in the value of money. I believe the pressure of that problem is now beginning to be felt to a greater extent than at any time since the end of the war.
I believe that when Lord Beveridge says that inflation is the great social enemy of our time as unemployment was before the war, he is perfectly right. I noticed with interest that Mr. Hawtrey, in his letter to The Times today, used these words:
There is now, I think, real pressure among the public for effective action.
One party or another, some Government or another, has got to produce a policy to deal with the decline in the value of money.
I agree with those who say that it is not going to be effected by any manoeuvre, or technical twist, or sudden change in monetary policy. There has got to be something in the nature of a social revolution in this country which has to have the result that every section of the community—employers, workers, Government and the rest—takes a new outlook and a new viewpoint upon a basis of liaison and co-operation to save the currency. I believe the problem to be fundamentally a social one. I do not desire to make a party point about this. If I put it bluntly, I hope I shall be forgiven. The great advantage that a Labour Government will have over a Conservative Government in dealing with this problem is the extent to which it is profoundly believed among the producers of this country that a Labour Government will show a greater sympathy and greater understanding in achieving these social objectives than a Government of any other colour.
I believe that to be a rather important and fundamental fact in our situation, but I think that even a Labour Government is not going to be able to encourage the kind of outlook on these affairs which is necessary for us to overcome this problem until we can point to certain practical and specific points in our policy which we can say are designed to counter inflation. Having done that, we can

invite the workers of the country, in the context of those practical proposals, to consider the whole problem of wage-claim restraint in a different light.
I desire to mention some of the points I want to see incorporated in such a policy. They are points which will help to overcome this problem of inflation, and when they have been accepted by one of our great parties of the State it will be possible in that context to get a new approach to the problem. The first thing is that it must be possible for a Government of this country in the present state of the law to achieve a far more practical and direct control over bank advances than this Government have been able to achieve in recent months. The machinery is all there. I appreciate the danger that one who is not an expert in these matters might over-simplify but the fact remains that the machinery is there, the power to apply the control is there. If there were any earlier deficiencies in the power of control they were eliminated by the legislation of the 1945–50 Parliament. We did not take over the Bank for ideological reasons. We did it for practical reasons like these. The power of control is there, I should have thought, beyond all doubt.
As that power of control is there, how does it come about that a Government permits a rise in the level of bank advances such as we saw at the beginning of this year? Having allowed that very substantial rise in bank advances and then seen them diminish for a short time in April and May, how does it then allow the rise to be resumed? The first thing I would wish a Government to say to the people—a Government determined really to tackle the problem of inflation—would be that they would apply, absolutely firmly and determinedly, controls upon bank advances.
The second thing I would desire them to say is that capital gains, when they are realised, are shamefully inflationary in character and they should be taxed. I am bound to say that I would not regard a policy which merely stated that and stopped there as being anything like sufficient or, indeed, necessarily very relevant to the problem of countering inflation. I think it is necessary that the income which comes from the taxation upon capital gains when such taxation is imposed, as I hope it will be, should be


earmarked beyond question for certain quite specifically non-inflationary or anti-inflationary uses if the situation is still inflationary, as I anticipate it will be.
Of course, no party can commit itself to a particular course of action in relation to revenue at some future time, but speaking for the moment with the policy of my own party particularly in mind, I hope that it will be advocated that if we are to have taxation on realised capital gains the revenue and income from that taxation shall be directed quite specifically and deliberately, if at the time it is coming in there is still inflation in progress, to non-inflationary purposes and funded and comprised in long-dated securities or whatever is regarded as the least inflationary form of use.
I am endeavouring to put forward specific points in the context of which I think we can hope to have a really improved relationship between producer and employer. That is the sine qua non of a real recovery.
The third point on which I wish to place emphasis is the vital importance of reforming the law to ensure that we stop the loophole of escape from tax liability available to companies in respect of their business expenses. I have no doubt whatever that the excessive deductible business expenses of companies is one of the most hotly resented scandals of our time.
I am told repeatedly that the monetary and financial significance of these is comparatively slight, but I do not for a moment believe that it is slight. Even were it regarded as slight and I was told I was dealing only with the fringe of the matter, I still regard it as important to have this reform because of the psychological part it would play, and because I believe the advantages now enjoyed "on the company" are matters about which strong objection is felt.
I should certainly like to see a ceiling imposed on the amount of business expenses which a company or its officers can claim to be free of tax. My wish would be that that ceiling should be calculated as a small percentage of the company's turnover. That would be a very effective disinflationary measure, and it could be made statutory. These ceilings are very effective. A married man and a man with a family knows how, in the preparation of his own Income Tax

returns, there is nothing more definitive than the point at which he observes the statutory limit imposed on his personal allowances. There is no getting away from that. I should be in favour of a business executive or a company officer, preparing his claims in respect of deductions for business expenses, coming up against a firm and strict and a low limit fixed by statute, such as the ordinary taxpayer faces in the limit on personal allowances imposed upon him.
I speak with great deference on these matters, because I do not claim to be an economist. But, as we have all agreed, this is a matter of such importance that all of us must bend our energies and abilities to finding a solution to it. I think I observe among transactions currently taking place in our affairs, particularly in the City, a number of highly inflationary processes which, at a time of inflation, the Government should ban, at any rate temporarily. I have in mind the matter of new issues, where existing stockholders buy, say, 50s. for 40s., or benefit from whatever is the particular discount. That is what it amounts to. The new share is immediately realisable. It seems to me the most inflationary transaction. It is an extraordinary thing that it should be permitted to take place at a time when inflation is widely recognised as constituting a great social danger.
It is not as though it is necessary. Unless I misunderstand the situation—and if I do, I should like it explained to me—it does not seem necessary in order to obtain the capital, because the payment of this discount and the consequent advantage to the existing stockholder is taking place in cases where the issues are substantially over-subscribed, and where the evidence is perfectly clear that the capital would be readily forthcoming from investors without any such incentive as the discount which I have criticised.
If we could formulate a policy which has regard to the points I have mentioned, modest points it may be, but practical and significant, we should then be in a position to go to the wage-earners and consider the whole problem of wage restraint in an entirely different climate from that which exists at present, What is vitiating the whole situation today is the knowledge that anti-inflationary measures which it would be perfectly practicable to adopt are not being


adopted and the workers are feeling that they are being selected as victims.
I do not wish to develop the point too far today, but there is a belief that a grossly unfair relative advantage is often given to other sections of the community than the wage earners. Whether that view is correctly held or not, the fact that it is held vitiates the whole matter and makes it impossible for the interests concerned to get together and consider what is the appropriate answer. That difficulty and that fault in the climate of opinion can be altered by practical steps being taken in respect of such matters as I have referred to, in particular, I would say, a sound, strong and well-publicised attack on business expenses, which would have a useful and important psychological effect.
When these matters are dealt with we can then discuss the problem in a different and much more helpful atmosphere. Having taken such emergency steps as these, I should be in favour of an inquiry into the causes of inflation and the problems created by it in the manner recommended by Lord Beveridge. It is abundantly clear from the speeches we have heard today that the causes of inflation and the methods of curing it are matters which deserve careful and profound study. I do not believe that the best way of studying them is by the setting up of a Royal Commission, but there is no doubt that study is needed. But study involves delay, and the situation brooks no delay. That is why I, think it desirable to have the kind of inquiry which Lord Beveridge recommends in the context of a situation in which practical measures have already been taken.
I make the same kind of comment on another aspect of the matter. The Chancellor said that he is having a further meeting with the National Production Advisory Council on Industry. He has had one meeting with that body, and I think it true to say that at the behest of a Trades Union Congress delegate he is having another. At the meetings of that body the Chancellor and representatives of the unions, the employers and officials of the nationalised industries get together to discuss these matters on a basis of liaison in study and search for solutions in their common interest. For my part. I think that is admirable and

all hon. Members would wish success to such meetings. But that process and the process of Lord Beveridge's inquiry seem to me to have this in common. They neither of them have sufficient regard to the anxiety which now exists. Immediate measures must precede long-term remedies. I believe that there are great social dangers involved in this persistent decline in the value of money. What is wanted are specific practical anti-inflationary proposals which surely a British Government should be capable of producing.

8.10 p.m.

Sir Ian Horobin: As we are nearing the end of a rather discursive but important debate, I will only give two sentences to the speech of the hon. Member for Liverpool, Edge Hill (Mr. A. J. Irvine). With regard to a capital gains tax, I think many hon. Members opposite wildly exaggerate the effect of it. I doubt very much whether in the last twelve months any tendency to inflation, such as capital gains may have, has come from that source at all, if we set off the losses on fixed interest securities.
As regards business expenses, I think that there again it is a symptom and not a cause. The reason why there has been such an extension of this process, which is simply bound up with an inflationary situation, is because we cannot reward the senior servants of companies by giving them more money, because it is completely useless owing to tax, and everybody has got to find some other way of paying them for their services. It may be undesirable, but it is a consequence and not a cause of inflation.
We have had a number of debates on inflation, and it may be asked why we are having one at the present time, when the amount of inflation is actually not much more than about half of what it was in the years when we were under the Socialists. Of course, as has been pointed out, I think the reason for that is that we can keep inflation going for quite a long time so long as there are "mugs" about. The trouble is that there are no longer any "mugs" left. Even archdeacons are now putting their gaiters into "Gussies," and everybody is trying to get into equities, and getting their pensions related to the cost of


living, so that the game is just about breaking down. I am not altogether sure that it is a bad thing. The trouble is that in that situation there is a tendency for us all to look for alibis, and I would only refer to two.
First, what seemed to me to be a dangerous alibi was started by my right hon. Friend the Prime Minister, who has put himself on record as saying that the real cure for inflation—I am not quoting his words exactly—is an increase in production. Of course, there is an element of truth in that, as there is in all the statements made by my right hon. Friend, but it was a very dangerous statement to make at this moment. After all, the national product has gone up by 20 per cent. in the last four years and production has gone up since the war by an enormous amount, all during the time of the big inflation that we are now talking about. It is only encouraging people to think that they can put off doing the things that are really necessary, and that everything will be all right if only we have more production, bigger nuclear stations and all the rest, but we have to have savings as well, and the trouble is that people have been mortgaging the increased production before we have got it, so that my right hon. Friend's statement, if misunderstood, could be a very dangerous salve to all our consciences in this situation.
The other alibi, and here I think that both sides of the House will agree, is that it is very often said that it is all the fault of the Government of the day. People say it is not the fault of the employers or the workpeople, but the fault of the Government. In a democracy, that is just mad. The Socialists were elected in 1945 to do the very things that made inflation inevitable. They were instructed to do it. They may have been a little spurred on by their own propaganda, but they were elected by the country to do what they said they were going to do, and what they said they were going to do is what has caused inflation. When we were elected, we were told to stop doing some of the things they were doing mostly irrelevant to inflation, but to go on doing most of the expensive things perhaps a little slower—so inflation goes on just a little slower.
The trouble with inflation is that too many people like it. The employers like

it, because they get full order books. The Treasury likes it because it always turns out that it gets a few £100 million extra in the kitty. The employees like it, because they can cock a snoot at the foreman. Everybody likes it for a long time, which makes it so very difficult to deal with. It is rather like the true story of a young teacher friend of mine, who said that he had been called upon to give sex instruction in school. He was a bit nervous about the job, and he approached one youngster and said, "You are growing up now. Are you ever troubled by impure thoughts?" The boy made the very charming reply "Oh, no; I rather like them."
That is what is wrong with England when it comes to inflation. We can sum up the whole of our history since the war to a very large extent by a parody of St. Augustine's famous prayer, "Lord, give me a stable currency, but not yet." That does not alter the fact that we have got to the situation when we must stop it, whether we like it or not.
What is rather depressing in this debate is that all the proposals which the other side trot out as if they were something new, are the old ideas that they tried year after year and which failed. The right hon. Member for Lewisham, South (Mr. H. Morrison), in a speech which, with respect to him, I would say was a very valuable contribution from the Labour side, rather got himself into the position of saying that the country was entitled to a change of Government, but that the new Government were not entitled to change their predecessor's policy. The Government do a lot of things which the right hon. Gentleman does not like, but it is no use him saying he is a democrat and will discuss with us provided we agree with him
The fact remains that all this business of controls and licences and all the rest of it landed us in what might be called a conventional crisis in 1947, an atomic crisis in 1948 and the megaton crisis in 1951, which blew right hon. Gentlemen opposite out of office and filled the benches opposite with what I might call poisonous fall-out, but it really is not any good asking the country to go back on all that now. On the other hand, it is a fair comment from the other side that, while we are perfectly entitled to refuse to make their mistakes, there has been


extremely little from the Government on what they propose to do now.

Mr. H. Morrison: Is the hon. Gentleman's defence of the Government that because the country likes such a policy, it would not like another Government coming in to stop it? Must we not do something in the public interest?

Sir I. Horobin: That is exactly what I am coming to. If the debate is not to be a disappointing one and perhaps do more harm than good, we must try to make up our minds on one or two fairly straightforward matters.
First, I would submit to the House that we have got to get rid of any idea that we can solve our troubles by technical "tricks", playing about with bank credits or advance limits. We must not go from one extreme to another. In the time of the monetary policy of the right hon. Member for Bishop Auckland (Mr. Dalton), when he was Chancellor, we had absurdly cheap money and an inflationary monetary policy pulling against controls. We must continue the credit squeeze and the policy of reasonably not very dear money. Personally, I think that further steps in hire-purchase control are called for and would be valuable. I really cannot see the justification, when the ordinary working people of the country are better off than they have ever been before, for them running into debt, and that is one of the plain facts of this situation—that people are buying so much of what they do buy on hire-purchase credit instead of for cash. There is scope for certain marginal changes of that kind.
Equally, it is true and quite important that the investment policy of the Government must be strictly pruned and limited. It is not a question of attacking the nationalised industries. The point is that we cannot lend money that we have not got. Lots of people have tried it, including Governments, but it cannot be done for long. I am glad that the Government have refused to loan Mr. Nehru £200 million which we have not got, but they have just given the Minister of Transport £100 million which we have not got. If the Government continue to try to invest, either at home or abroad, more than the real savings of the people, inflation is inevitable.
On the other hand, in spite of furious opposition from the benches opposite, substantial efforts have been made in the past by my right hon. Friend and his predecessor to limit the borrowing of the great corporations and the local authorities. It may well be that some of those programmes should not be cancelled, but should be postponed or spread over a longer period to reduce the pressure on the economy.
My point in that connection is that while we must not conduct a monetary policy which actively hinders the attack on inflation, while we must continue, and even slightly increase, the restrictions on investment, the great and important thing to be borne in mind is that all those things by themselves cannot do much more than prevent the situation from getting worse. For instance I think we shall have a hell of a fight to keep the alleged savings on defence.
It would be extremely difficult to prevent almost all Members, not only on this side but on the benches opposite, urging their various pet proposals for roads, tunnels, hospitals and schools for which exceptions should be made. The Chancellor will be doing very well indeed if he can even prevent the situation on those lines from getting worse.
I will touch only briefly on one appalling inflationary problem which is looming up on us. Hon. Members opposite have produced a pensions and insurance scheme which is wholly bogus since they threw overboard the Beveridge proposals. On top of that rotten foundation, they are now putting forward proposals by which we would run into the "red" to the tune of hundreds of millions of pounds in about ten years. The pressure at the next election will be such that we ourselves will no doubt produce a scheme which would go bankrupt in five years instead of ten. The Chancellor, therefore, has quite a job ahead of him in preventing things from getting worse. It is no use holding out great hopes that in that part of the problem we shall do much more than keep things as they are.
What, then, is the real nub of the whole situation? I put this in all seriousness, and, I hope, not provocatively, but I must put it shortly. The answer is wages. The Chancellor has given some figures and I will give one or two more. Last year, the


whole of our domestic capital expenditure increased by only something like £130 million. I believe that every instructed person considered that too small. Hon. Members opposite might think that more of it should go into the nationalised industries and we on this side might think that more should go into the private sector, but as far as inflation is concerned it does not matter where it goes. We all agree, I think, that we should be investing more and not less than we are doing. Everybody is agreed that we ought to be investing more rather than less overseas if we could do it.
The whole of the gross increase in rents, dividends and interest last year was of the order of £100 million. If we calculate the standard rate of Income Tax, plus the very substantial amount of that which is saved, it will be seen that the Post Office settlement alone poured more purchasing power into circulation than the whole of the increase in rents, dividends and interest.
What really is pouring the inflationary pressure into the industrial structure is wages. Last year, wages and salaries went up by something like £900 million. Two-thirds of that is wages. It is really playing with this issue for anybody to believe that we can stop this inflation—I do not say any inflation, at any time, but this inflation now, without dealing with wage claims. This present inflation is caused by unreasonable wage claims. The cost of living today is the cost of Cousins. I do not believe that the right way to deal with that is either by a general wage freeze, nor do I think that very much, although something, may be achieved by a general inquiry such as the Government contemplate.
Our whole tradition of wage arrangements is that each claim is, as far as possible, dealt with on its merits by itself. That is a view held strongly in the trade union movement and it is much better economics than some of the attempts at generalisation which have come from both sides of the House.

Mr. Robens: What advice would the hon. Member give to the many millions of ordinary wage earners, such as shop assistants and others, who have no opportunity of overtime, whose gross income is about £8 10s. a week and who have, perhaps, a wife and two children to

keep? What advice would the hon. Member give to them? Would he tell them that they should manage on that money? Can they?

Sir I. Horobin: I am not getting into the giving of advice. I think that people would be very unwilling to take advice from either side of the House on the rate of their wages, and certainly not in response to a sudden question.
My first point is that we cannot do anything practical about this inflationary situation in which we find ourselves today unless we can do something to stop this introduction into the industrial structure of wage claims on the present scale, not backed individually by reference either to the cost of living or to productivity. I believe that we could get over almost the whole of our problems, if not the whole of them, if we could only produce a situation in which wage settlements, so far as they were made by proper negotiating machinery, were, in fact, earned and agreed.
By and large, productivity is going up 2 or 3 per cent. at least. The cost of living has not been going up recently by as much as 4 per cent. There is not a great deal of difference between the two. I believe that it would not be at all difficult to deal with our existing inflationary position if claims, taken individually, which were substantially above that level of 3 or 4 per cent.—although I am not tying myself to a figure—were publicly recognised for what they are, that is, the present main cause of the rise in the cost of living which everybody, in all parts of the country, has come to regard as intolerable.
I do not believe that we are likely to get a general wage freeze—I would not consider it desirable—but I believe that the time is coming when, if there is not agreement by common sense, in the last resort the Government should use all the powers of influence they have to oppose any such wage demands. We must simply stop these excessive wage demands, wage demands which not only have no relation to any increased productivity or are grossly higher than the increase in the cost of living. If we could stop them I believe that we should be near to equilibrium, and should be doing the only practicable thing which can be done to bring ourselves out of our difficulties.
Apart from those difficulties—and herein lies the tragedy of all this situation—we are so near to success. For well over a year in the last Parliament and for the best part of a year in this the cost of living was kept very nearly stable. It would require very little to stabilise it. It would be sufficient if we simply, as it were, cut off the obviously unreasonable and excessive wage increases. I believe that then, with a certain amount of technical adjustment, we could achieve equilibrium and break the vicious circle. The real wealth of the country is increasing. We have only to stop for a very little time mortgaging the future, as we are doing, to achieve an equilibrium which would, for a reasonable period, remain stable. If once we did that for a reasonable period, then, with a little good will on both sides, we could, I think, keep it,
However—and this is my last word. [HON. MEMBERS: "Hear, hear."] Well, I have listened to the whole of this debate and I think that some of the speeches have been less directed to the real problem than my own. [HON. MEMBERS: "Oh."] However, I am perfectly certain that it is impossible by any device to deal with this problem with which we are faced unless we are able and prepared to deal with wages. Unless we are, we may just as well shut up shop, throw in our hand, and let inflation rip.

8.31 p.m.

Mr. Hugh Gaitskell: I very much regret that this debate had to be cut short by some forty minutes before it began and has to be cut shorter still by the half hour we lose because of the Guillotine. I regret it because I know that many hon. Members who wished to speak in this debate are unable to do so. I cannot help feeling that it would have been useful to the Government if they had heard more contributions from hon. Members on a matter which is of enormous importance to all of us.
The speech of the Chancellor of the Exchequer struck me as being remarkably complacent on the one hand and, on the other hand, almost entirely devoid of any positive suggestions for dealing with the problem we are discussing. Of course, it may be that, being complacent, the right hon. Gentleman saw no reason for putting forward any measures, but I cannot help having an uneasy feeling that

the causal connection is the other way round, and that being unable to think of anything to do in the present situation he thought it better to say there was no need to do anything.
His speech contrasted rather sharply, I thought, with the address which he gave at the opening of the new offices of the United Kingdom Provident Institution, in which he said:
The truth is that this nation must either squarely face the problem of inflation and accept the policies necessary to check and curtail it, or else it must face a continual decline in the value of its currency.
Those words from a Chancellor of the Exchequer are very grave words, and it is hardly surprising that they caused a great deal of comment and stimulated a certain amount of alarm in the financial Press, and, indeed, in the country generally. It is true that ten days later, perhaps because the right hon. Gentleman felt he had gone a little too far, he was saying, speaking in his constituency of Monmouth:
Do not believe all this sad talk you hear about difficulties and problems.
Nevertheless, I think that his speech on 10th July was one which was much worthier of our attention than the later reassuring comments which he made.
The Prime Minister, speaking at Bedford, followed the same complacent, reassuring line. He told us that everything was going all right. He said that most of us
have never had it so good.
An hon. Member says that is true. If he will think for a moment he may, perhaps, perceive that it is bound to be true unless the standard of living is actually falling.

Mr. Osborne: Was not that what the right hon. Gentleman predicted when he was Chancellor of the Exchequer in 1951?

Mr. Gaitskell: The standard of living in 1951 was affected by our increasing expenditure rapidly on a very large defence programme and which had the support of hon. Members opposite. I do not really believe that the hon. Member thinks that we can expand defence expenditure by £500 million a year without making some difficulties for individuals. Therefore, we might leave that subject alone.
It is true, of course, that as long as there is no actual fall and as long as there is the slightest increase in living standards, "We never had it so good" will apply, but I remind the Prime Minister that that is a very different thing from the talk of the Lord Privy Seal when he was Chancellor of the Exchequer. He was not content merely to say that the standard of living might rise. He talked of doubling it in twenty-five years. It was a very different thing from merely remaining more or less stationary, as we have done in these last two years.
Moreover, even if we "never had it so good", that is not contributing to the major problem of the balance of payments, where our object must be, and is acknowledged to be, a surplus of at least £300 million. I ventured to say, speaking in the Budget debate, that when we take into account the drawing down of the sterling balances, as various Colonial Territories become independent and wish to develop themselves and wish to use their resources, when we face that as well as the needs of investment in the Commonwealth, the blunt and rather terrifying fact is that if we are to avoid all danger of crisis, meet all our obligations, accumulate gold and repay debts, we need a surplus of about £500 million a year. That may be an appallingly difficult task. [An HON. MEMBER: "Impossible."] One of my hon. Friends says that it is an impossible task. We shall see. The House will agree that, nevertheless, some move in this direction is what we wish to see.
Though, no doubt, many people "never had it so good", there are some people of whom certainly that is not true. The Chancellor and the Prime Minister know very well that those living on fixed incomes, and certainly old-age pensioners, will not talk that kind of language about their condition. Nor should we. I do not propose to speak about the subject now, because we shall be debating it next week, but it is our duty and that of the Government, when faced with an inflationary situation, to do all we can at least to safeguard the standard of living of the poorer people in the community.
I say categorically that I think there are dangers in the present situation and that the danger of inflation is real. I do not want to go over old ground; we can have a position in which prices

are rising gradually over a period of time, 3 per cent. or 4 per cent. or 5 per cent. a year, and it may be that for a time all is well. We have rising production—perhaps not stagnation as we have had in the last two years—and many people "never had it so good", yet there comes a point when people realise that this sort of thing, this steady rise in prices, is going to go on and on. When they realise it, a number of very serious economic consequences follow, because then, as my right hon. Friend the Member for Huyton (Mr. H. Wilson)said, they begin to dispose themselves accordingly.
One example of what happens is the state of affairs in the gilt-edged market. I do not want to go into a rather technical matter in detail, but my point is simple enough—that if people suppose that prices are going to go on rising and the value of money is going to go on falling they are not going to put their money into something which brings back the same amount of money when it is sold. They are going to put it into something which will rise in value with the general rise in prices. The consequences of that for interest rates, for the gilt-edged market are serious enough, and that brings me to the other consequences.
It is not merely that inflation may take a cumulative turn at a certain point. It is not merely, even if some people do well out of it, that it is monstrously unfair to others. It is not only that it may give rise, if it proceeds long enough, to grave social complications, but it also has very serious external consequences.
Nor is this only a matter of the excess of imports over exports, of incomes rising so fast that we bring too much into the country in relation to what we sell abroad. In our case there is something else as well. We have very large sterling liabilities, and those liabilities, resulting largely from the war, put us in a very vulnerable position indeed. If those who own the sterling balances begin to feel that the value of the £ is going to fall continually, we may be quite sure that they will wish to withdraw their money.
Therefore one is bound to say that this is a danger which we must all face; a danger which I know the Government are aware of though, as I say, I thought the Chancellor's speech complacent. There is in this matter no difference between us


and I want to emphasise, that we on this side of the House place enormous importance on the preservation of the value of sterling and the avoidance of any threat or possibility of any further devaluation.
There is another thing on which I think we can agree. I certainly would not dispute the Chancellor's comment that there is no simple solution to this problem. There is no gadget, there is no gimmick, which you can pull out and say, "This is the way to stop the rise in living costs." This is not at rock bottom a technical problem. It is a social and a political problem. It is a problem of relations within society, and we should understand that and reject any idea that we can produce a solution out of the hat.
Perhaps the first thing to do is to consider what are the causes of this situation in which we find ourselves. I know that same hon. Gentlemen opposite make a habit of accusing the nationalised industries of being responsible for this. Not many, indeed, I think very few, have spoken today in that sense, but I do not think I am unfair if I say that at Question Time this impression has certainly been created. I am glad that my hon. Friend the Member for Bedwelty (Mr. Finch), in a very forceful and effective speech, probably destroyed in advance any comments of that kind that might have been made. First my hon. Friend showed clearly the facts of the situation and the increases in the prices of private enterprise products compared with the increases in the prices of the nationalised industries. The figures he gave showed conclusively that it is impossible to argue that the prices of the nationalised industries have gone up more.
Secondly, I would say that any idea that the nationalised industries are responsible for starting a wage-price spiral really does not bear examination. I have heard all sorts of industries accused of doing this very thing at one time or another. One year we are told it is agriculture, another year it is roads, another year it is coal, another year it is engineering. The truth of the matter is that we cannot pick on any one point and say, this is when something new started. The process of prices rising and wages catching up and prices going up has been going on for some years and we cannot say at one point, "These people were responsible, these employers or these workers

were responsible." It is a continuous process.
What we can say however is this. There have been certain outside influences on this phenomenon. There were some outside influences when we were in power: the rise in world prices, the rise in the prices of our imports, doubling in the six years that we were in office. That was something which the Government could not help, no Government could help, and which undoubtedly made the whole internal position extraordinarily difficult. But it is a fact, which I must repeat, that since 1951 there has been no trouble from that quarter. On the contrary, import prices over the period have fallen, fallen very sharply to start with and then levelled out afterwards.
But something else external to the wage-price-price-wage spiral has intervened, which is the result of the Government's action first of all of deliberately cutting the subsidies and driving prices up, and then other measures, of which the latest and most obvious example is the Rent Act. This is something which the Government have done of their own volition, and the inevitable consequence when this sort of thing happens must be to give an extra twist to the spiral.
It is sometimes said that the nationalised industries should not have conceded wage increases. Are hon. Members opposite saying that the nationalised industries must treat their workers in a way in which other workers are not treated, that they must involve themselves and the country in the risk, of industrial trouble, that they must deliberately create a shortage of labour because they will not pay enough wages? Are they saying that railway workers and miners are to be unfairly treated in this way?
I do not see how that kind of argument can possibly be sustained. It is as well to put the facts of the situation on record. The increase of earnings in the coal industry, which seems to be the main target of some hon. Members, from 1948 to 1956 has been, for face workers 68 per cent., for all workers 74 per cent., while the increase for all industries is 71 per cent. So it is clear that there is no exceptional movement there.
It is sometimes said that the nationalised industries should not pass on the increases in wages in higher prices. We all agree that the nationalised industries


should do everything they can to increase efficiency and, therefore, absorb wage increases without an increase in costs, but it is unfair to expect them to do things which private enterprise is never expected to do. Indeed, it is a rather curious comment on the attitude of hon. Members opposite that they now seem to rely on the nationalised industries to do things which they know they cannot impose on private enterprise.
We utterly reject that proposition. We do not think that losses should be imposed on the nationalised industries. We all know perfectly well that price increases have occurred just as rapidly and for similar reasons in other industries. It is not necessary to say more on that subject, and I hope that after this debate we shall have a good deal less sniping at nationalised industries from hon. Members opposite. It does not help, and if they want to take the nationalised industries out of politics they had better begin to alter their Questions on the Order Paper, or at least their supplementary questions.

Sir I. Horobin: Do not look at me.

Mr. Gaitskell: I am looking at the hon. Member's bench, anyway.
Another suggestion about the real cause of the trouble has been made by the Government. We have heard from the Prime Minister in his speech at Bedford that there is only one thing necessary to a solution of the problem of inflation, and that, he says, is to increase production. At first sight it always appears good to say that we should increase production, but I cannot help being a little puzzled when I compare what he said then on the relationship between inflation and production with what he said in his own Budget speech fifteen months ago and what the Chancellor said in his Budget speech this year The Prime Minister was then defending the fact that production had not increased. He was pointing out that it was necessary in order to curb inflation that production should go down, or at any rate be restricted.
The Government should make up their mind on this matter. Do they want production to increase or not? Do they regard an increase in production as a solution? For what it is worth, I do not think that increased production is necessarily a cure for inflation. If it is due to

increased productivity, it helps enormously, of course. But if it is simply due to the re-expansion of industry after a period of stagnation, it is then certainly not a cure for inflation, unless, first, we have no trouble about our balance of payments, and we do not get what the Chancellor has warned us about, namely, a situation where, as production expands, imports increase and exports do not rise correspondingly, so that we are back again with a balance of payments crisis. And we shall certainly get no solution to the problem of inflation if, as production expands, prices do not remain stable. We must face the fact that in a free economy, in which hon. Members opposite believe, increased production very frequently accentuates the problem of inflation.
What has happened in the last two years? I do not think that anyone studying the question can doubt what it amounts to. In 1955 we were told by the Government that production was rising too fast imports were coming in too fast there was therefore a balance of payments crisis, and therefore there had to be restrictions and a credit squeeze. There was the autumn Budget of 1955, and then the policy of stagnation. The Government claim that this policy of checking expansion and keeping down production has succeeded in putting right our balance of payments problem. I conceded in April, and I concede again now, that there is some force in that argument. It was, however, at a very heavy price—the price of a severe loss in production and, correspondingly, in consumption and investment.
What is perfectly plain is that, while the Government's policy may have had some success in this direction, it failed completely to prevent inflation, because although we have had stagnant production, we have had also rising prices throughout this period. I have not the slightest doubt that it is because the Government discovered this and came to the conclusion that the deflationary policy in which they profess to believe was not working effectively in keeping down prices that they changed their policy and decided to let production rise.
That is the position in which we are today. Having had this policy of stagnation, we are probably now moving into a boom period. There are certain advantages in that. Production is


beginning to go up—about time, too—but if any hon. Member opposite, or the Chancellor, believes that in a free economy and without any Government intervention this is going to evade further rises in prices and eventually, I am very much afraid, a further balance of payments crisis, he has his head very much in the air.
The truth of the matter is that hon. Members opposite have believed—I do not doubt that they have believed very sincerely—in a free economy. "Conservative Freedom Works" was the great slogan of the last Election. Is Conservative freedom going to solve the problem of inflation? I believe that there is only one way in which it can. If you have a free-for-all and a free economy, you can prevent continuous inflation only if you create enough unemployment to prevent the inflationary forces really getting to work.
The interesting thing is that we have had an experiment in this direction. We have had the country going through a period of stagnation with the Government watching the position. But now they have made up their minds, apparently, that the game is not worth the candle. If that is the case—and a great many critics on their own side do not agree that it is; if one reads the financial columns of the newspapers one sees that the criticism of the Government is that they have not continued deflation long enough, and have been too easy on this matter—where in a free society, will the Government turn to prevent inflation?
The answer which we had today from the Chancellor was that this was a combined operation. "We must all work together," he said. "We are all in it." It is not enough to say that we must all work together and that there must be a combined operation. If the right hon. Gentleman believes that cost inflation is the trouble, what does he intend to do to get the collaboration and co-operation of the organised workers of this country? I speak very bluntly, because I think we ought to; and we all know that that is the problem.
What has the right hon. Gentleman offered today? He has offered an independent council. I do not say that there are not some circumstances in which a Government, if they were doing the right

things in other ways, might find some body of this kind of value. Personally, I think that it is a mistake to make it an independent council. I believe that the best thing is to get both sides of industry together, and I believe that it would have been more sensible to have allowed this to develop out of the Joint Industrial Council.
Moreover, what worries me is this: will this body be independent? What sort of people will be appointed to it? They will not be people from the union side, they will not be industrialists. Who will they be? Will they be people able to make genuinely independent pronouncements? The fact of the matter is that if they are simply to draw attention to the facts in the economic situation, there is no need for them at all. We have all the facts that we want in the blue books, green books, White Papers and all the rest. If they are to offer advice on policy, then I do not believe that a body of this kind appointed by Conservative Government will be independent at all.
The Trades Union Congress has reserved its position on this matter, but most certainly it has not welcomed the Chancellor's proposals. One would have thought that today he would have taken the opportunity at least to make some gesture towards the unions, but one cannot describe his speech as an olive branch to the T.U.C. There are to be no import restrictions—not that any of us said that import restrictions were a cure for inflation; they are an emergency measure which one may have to take to protect the balance of payments. There is to be no building licensing and no price control. In passing, let me ask the Chancellor, in view of his opinions on this subject, whether he will now say that the Coal Board should be free to fix its prices as it likes, without asking the Government.
The right hon. Gentleman said that there was nothing wrong with his Budget. He said that the Surtax remissions were, of course, in the national interest and have nothing to do with the problem of cost inflation. What a delusion he suffers from! The T.U.C. surely has made it abundantly plain, as we have made it plain again and again, that if you want to get a combined operation


you must have policies which appeal to the organised workers of the country. The T.U.C. has made it perfectly plain that the right hon. Gentleman never listens to what it says, that he has rejected its ideas on planning and refused its conception of social justice. The T.U.C. cannot be expected to collaborate in those circumstances. Why should it? Why should we have control of wages and no control of profits and dividends? Why should the unions be prepared to exercise restraint when there is no restraint on tax remissions to wealthy people? Even if the leaders could do it, which I very much doubt, will their members be prepared to exercise such restraint?
The truth is that the Government are now utterly bankrupt of policy. Logically, what they should do is pursue their deflationary policy further. Logically, what they should do is create enough unemployment to weaken the unions, never mind the cost in industrial disputes, in order to prevent the pressure for higher wages and in order to reduce the share of labour in the national product. But they dare not face that, because they know the political consequences. Yet, at the same time, all they can do is to appeal to everybody for help, appealing without the shred of an idea of what policy they should pursue.
Let me tell the Chancellor—and the Prime Minister—that unless he is prepared to throw overboard the doctrinaire ideas of Conservative freedom; unless he is genuinely willing to try to create a society of social justice; unless he is prepared to use fiscal policies which attack the spivs who get away without paying taxation—not the people who pay-as-you-earn, but the people who pay-if-you-care; unless he can introduce such measures as a capital gains tax, for which, in our view, there is an overwhelming case today; unless he deals with the evasion and avoidance of taxation which is taking place today; unless he is prepared to adopt policies which unite the country; then under this Government there is no chance of defeating the powerful forces of inflation. Because, in view of his utterly negative, utterly complacent speech, there is no hope of any move in this direction, we shall be obliged to divide the House tonight.

9.0 p.m.

The Prime Minister (Mr. Harold Macmillan): We are now reaching the end of this debate and I, like the right hon. Member the Leader of the Opposition, regret that it has been curtailed, because we have had most valuable and useful contributions from all sides of the House.
I confess that I find it rather a strange experience to sit here day after day and listen to the arguments and problems presented by high prices and over-full employment. When I first stood for the House of Commons in 1923, soon after the post-war boom broke, and for the next twelve or fifteen years, including four General Elections, one problem and one problem only held the political field. It was the problem of deflation, violently and rapidly falling prices, and massive unemployment. We debated it, as many of the older Members here remember, week by week and day by day. We put forward all kinds of rival views as to how it should be solved.
Unaccountably, as it seemed to some of us, the Conservative Governments of the day remained faithful, apart from the great measure of Tariff Reform, to orthodox monetary and economic policies. I am bound to say that when the Socialists came in they followed methods almost more orthodox and austere than the Conservatives. Only one man at that time seemed to me to grasp the full character of that problem, and that was Mr. Lloyd George. It was for that reason that I and other Conservatives ranged ourselves to support his movement. At any rate, we all had a go at it, and nobody solved it.
Today, it has somehow solved itself, but this new trouble has come which seems to dog our footsteps. Having solved one problem, we have now the one we are discussing, that of rising prices. Every hon. Member knows, and every man and woman in the country knows, that for the mass of the people—I would say for the great mass of the people—there has never been such a good time or such a high standard of living as at the present day. I repeat what I said at Bedford, they have "never had it so good". Curiously enough, that is what the Daily Herald says, under its revised management. It has chosen today to put an advertisement into the capitalist Press,


the Financial Times, urging capitalist employers to use the Daily Herald as an advertising medium. This is the reason it gives, together with a little picture of young children and a car:
Thousands of Daily Herald families already enjoy a car, but many more will be planning one in the near future if their standard of living continues to rise at the present rate.
I can only repeat that I have been grateful to see the change. I believe that all of us in the House, certainly the older Members, feel grateful that there has been this great change. When I am told by some people, some rather academic writers, that inflation can be cured or arrested only by returning to substantial or even massive unemployment, I reject that utterly.
There can be conditions of over-employment with insufficient mobility of labour and we must not be debarred from taking the appropriate measures to control inflation because some temporary dislocation would follow. Indeed, last year the action I took as Chancellor of the Exchequer had that result and the labour realised was rapidly absorbed in new work, greatly to the public benefit.
Nevertheless, I say this. If the mass of our people ever believed that there was an intention to bring about large-scale unemployment they would set their faces—and, I think, rightly so—against every reasonable and proper measure that this or any other Government might propose. But, as I say, we have now this new problem. As my right hon. Friend the Chancellor of the Exchequer said, it is not only in this country. Every country in Europe and in the New World is affected by it. This is a problem that springs naturally from a bouyant and expanding economy and, somehow, we have to master it.
It is partly an economic problem and partly, as the right hon. Gentleman said, a social one. It is an economic problem in the sense that it may, in a country like our own, where we depend so much on exports, if it is allowed to develop, threaten the whole stability of the economy and, therefore, the lives and happiness of the very classes—the producing classes in the widest sense—who have reached this high standard; this is because it may lead to an external crisis

—balance of trade, balance of payments, and all that—or it may lead to so heavy a fall in the value of money as to make savings unattractive and, therefore, the provision of fresh capital resources for industry and production correspondingly difficult.
That is the economic problem. It is not only in the interests of both sets of people—the great mass who have benefited and the people on fixed incomes and all the other classes who have not benefited—but in the general interest that these dangers should be combated.
There is also the social problem. For this, with all the good that it has done to us—and, as I say, I rejoice in it and in the change in the look of the people of our country—it means that those living on fixed incomes, pensions of all kinds, have fallen behind and have not been able, as it were, "to contract out" of the increased price level by increasing their personal incomes. Therefore, whether we regard it as an economic or a social problem, I think we have a duty, all of us, to see whether we can alleviate, we hope perhaps cure, a disease which, although not so dramatic as the one which afflicted us before the war, may in the long run prove equally pernicious.
At any rate, I will give this pledge on behalf of the Government. We will not shrink from any measure, popular or unpopular, which we may feel will be directed towards the solution of this problem. I think I have a right to make this claim, because we have taken many measures, the credit restrictions, the cuts in Government expenditure, the abolition of subsidies and the introduction of a sound measure in the Rent Act, an attempt to reduce the cost of the Health Service, our new defence policy and many other decisions of this kind. None of them was easy to take, but all of them together constitute a massive contribution towards deflationary policies.
The right hon. Member began in a rather more professorial form, but ended by making a great attack and by telling us that he would divide the House, and so forth. I suppose this debate must be treated by me as a party debate. In a sense I regret it, because the first part of his speech was rather more professorial; but if he treats it as a party debate I must have regard to that. I think that we


have a right to consider what are the particular policies which have been put forward and are now being put forward—there is no hiding them—on both sides. Here we can learn, not only from what each party preaches, or says, or promises, but from what, in fact, it has done. There have been about twelve years since the war. We each have had about six years of office. Let us take three or four simple tests.
Let us take, first, the balance of trade and the balance of payments. I suppose the right hon. Gentleman would admit that was an important test. During the six years of the Socialist Administration the trade balance reached a cumulative deficit of £800 million. In spite of all the cuts in imports, the controls and all the allocations and rationing and methods of limiting consumption—[An HON. MEMBER: "At the end of the war."]—when they left office, in 1951, the adverse trade balance was running at the rate of £700 million a year.
The right hon. Gentleman talks about complacency. I do not know what right he has to talk about it. In the following six years there has been exactly the opposite. On the trade balance, we have had a surplus of £800 million against a deficit of £800 million, a deficit to which the sort of policies now being advocated certainly contributed and would contribute again.
How has that surplus been achieved? Curiously enough, not by reduction, not by cutting imports lower and lower, but by a great increase in exports. The right hon. Gentleman is always talking about the dollar problem. During the last four years dollar imports have certainly risen. They have risen by 25 per cent., but dollar exports have risen by 50 per cent.
I take as the next test, savings and investment. Take investment. We all say that is very important. Under the Socialist Administration capital investment in those six years was actually lower than in 1938. Under the Conservative Administration it has gone forward rapidly. In 1955, net capital investments in real terms, after allowing for price changes, was 55 per cent. above 1951 and 40 per cent. above pre-war. So we have not done too badly there. The gross investment by companies has increased by one-third in those six years.
Now we come to savings. There was a very interesting speech by the Leader of the Liberal Party on that. Curiously enough, that has not been so bad. We might as well put some of the good side as well as the bad. Personal savings under the administration of the Labour Party were really almost a minus quantity. Of course, we had borrowed a great deal of money then. The right hon. Member for Huyton (Mr. H. Wilson)referred to the defence aid we had last year from the United States and Germany. Yes, we had some, and he is—

Mr. H. Wilson: I did not say it.

The Prime Minister: Well, if it was not the right hon. Gentleman, it was another hon. Member. Perhaps he may have mentioned it.
At any rate, if I am mistaken I am sure that the right hon. Gentleman was very wise not to mention it, because in this period we had 5,000 million dollars from the United States and Canada and 2,700 million dollars from Marshall Aid. Of course, there is a good explanation of why there was so little personal saving then: it was because the standard of the people was not so high and the continual threats of confiscation did not encourage people to save. Anyway, personal savings were, in fact, £160 million in 1950. Last year—this is the other side of the picture to which I would draw the attention of hon. Members—they were £1,500 million, nearly ten times as much.
I have already spoken of the contrast between the standard of living in the inter-war years and now. Although the gulf is not so great, there is a fairly big difference between the way people live now and the way they lived under the Socialist Administration. Then, prices rose faster than wages, and that in spite of controls. Every Budget brought new taxation. The purchasing power of pensions was very much reduced. The ration at times fell below the lowest wartime levels. The housing queues grew longer and longer. It did not turn out to be Utopia after all.
Now I come to the last point by which we can judge these two policies, that of the cost of living, which is the problem today. The cost of living has gone up by 20 per cent. I frankly admit that, and it is our problem. But in the six years of the Socialist Administration it went up


by 40 per cent. And then there was the difference that the wages and salaries of the people did not keep up. Now, although prices have risen by 20 per cent., the means of paying them have risen, too, for the great mass of the people, because wages and salaries have risen by 40 per cent. Indeed, the trouble is, perhaps, that they have gone up too far and outstripped production.
There are now two radically opposed policies put forward to deal with this problem. There is the Socialist plan—[Interruption.] Right hon. and hon. Gentlemen get very excited, I notice. They like to "give it", but they cannot "take it". What is the Socialist plan? It is the same medicine which has failed us so dismally before. Higher taxation—we are told that. More taxes, more State expenditure, a return to controls—[HON. MEMBERS: "No."] Yes, it was suggested to us that there were to be fresh taxes. Presumably there will be a return to price control, and if we have price control no doubt there will be a system of subsidies—or perhaps we are not to go back to subsidies—[HON. MEMBERS: "No."] All right, we are not going back to subsidies, but, if that is so, hon. Members opposite should not accuse us of having abolished them.
Against all this—it is the Socialist policy and the country may as well know what it will get if the party opposite ever gets back to office—in contrast to this, we have the policy which my right hon. Friend the Chancellor of the Exchequer expounded today. First, we shall keep down Government expenditure by every means we can, and we have already done a great deal. In terms of 1951 prices this Budget is £400 million down, and that in spite of increases in expenditure on education, pensions and health. We have reduced the total of civil servants by 50,000.
In our new defence policy we shall, at any rate, stop the almost automatic rise in defence expenditure. I believe that we shall achieve real saving in terms of money and, above all, and what is more important, in terms of manpower, and in the scarcest of all commodities, skilled technical and technological experts.
Our second duty is to encourage saving and discourage spending. The credit

squeeze and similar monetary methods will be continued as stringently as necessary. Part of this policy of discouraging spending means, as my right hon. Friend said, budgeting for a surplus, but, of course, the positive side of discouraging spending is encouraging saving. We shall continue to encourage savings by every possible method, and I am much encouraged by what even the right hon. Gentleman admitted to be a success—the great success of last year as a savings year. I am not even ashamed of the Premium Bond.
This monetary policy, restriction of credit, acceleration or retardation of the investment programmes over which the Government have control—these are all measures that we must intensify or relax as the situation demands. Of those industries which remain fully nationalised, I would only say this. They are, of course, much debated, but I will try to say what I think the House might regard as fair.
I think that we have got very good men in them, both at the top and throughout the industries, and I do not think we help very much by nagging criticism of them. We must find the best men we can get and help them, but I would go on to say that they are in a really sheltered position. In the old days, we used to have a contrast between the sheltered industries and those not sheltered. The nationalised industries are certainly sheltered, and, because they are, they have a special duty not to exploit the nation.
Similarly, with their investment, they are not able yet—perhaps some of them may be earlier than we think, and I hope they may be—to face the test which faces ordinary industry in the market when seeking public subscriptions of money. It is, therefore, our duty to apply to them a special scrutiny, and this we have done and shall continue to do.
There was one point which the right hon. Member for Lewisham, South (Mr. H. Morrison)raised in his very interesting and helpful speech to which I think I should, in courtesy, reply. He asked what repercussions the new body, to which my right hon. Friend referred, would have on the Economic Planning Board. I think the answer is that the Economic Planning Board is part of the machinery which enables the Treasury to keep in


contact with both sides of industry on general economic problems. It does not issue public reports, and it is not directed primarily to problems of prices or wages. This body, therefore, will have quite different functions, and will not, I am assured, cut across in any way the work of the Economic Planning Board.
I have said, and I am not ashamed to repeat, that if we are to solve this problem in a free country—and this is a phrase which perhaps is hackneyed, but, I think, is still true—it must be by a combined operation. There is one thing that I would venture to say to those with very great influence in what, in a period of full employment—and I hope it always will be a period of full employment—must necessarily be a position of great power, those who advise and manage organised labour. In present conditions, when full employment exists, it is those who have labour to sell, whether of hand or brain, who have the greater bargaining strength. I will venture to say to them that since they have this increased power they must also, and I feel sure that they will realise it, have increased responsibility. We believe in freedom, and we have done a great deal to restore it, but freedom does not mean licence, and rights involve responsibilities.
If they use their strength unwisely, they may easily bring about the opposite of what they are seeking. They may even bring about the collapse of the whole structure, and, instead of benefiting their members, may do them great injury. Even if they avoid that, if they are thought to use their position unfairly as against the defenceless classes, they will build up against themselves the same kind of division which many of us remember and so deeply regretted in our country in the period between the wars.
There is, at any rate, a point, and I must repeat this, at which no Government, of whatever complexion, can stand idly by and, in the name of impartiality, be silent witnesses of economic decline.

Mr. Harold Davies: What does that mean?

The Prime Minister: I come now to the last point which the right hon. Gentleman made. He rather attacked me for having said that, in the long run, additional productivity by hand and brain

and skill was our solution. [HON. MEMBERS: "Production."] Additional production, and, of course, productivity, in all its forms, is our final solution.
It is true that last year there was a pause. It was imposed because there were then developing changes in the balance of payments field. The right hon. Gentleman said that we had solved the problem of the 'balance of payments, but, he added, at how high a price. At any rate, it was not at such a price as we nearly paid in 1951, when the right hon. Gentleman was in charge and took himself and his party out of office and brought the country nearly to perdition.
I do not claim that a Government—any Government—can solve these problems by themselves, but since this matter is to be voted on tonight by a party Division, I ask hon. Members, as I have a right to do—[HON. MEMBERS: "Ask the country."]—to make their decision. If they consider the two approaches put before them, they will know which is the most serviceable to the nation. We have only to ask right hon. and hon. Members opposite—[Interruption.] The right hon. Gentleman cannot shout me down. If he does, he will not get a vote at all, because I will talk it out. For once, I am in a much stronger position. But since the right hon. Gentleman wishes to force a Division, I appeal with absolute confidence to the House to support the Government in the Division.

9.27 p.m.

Mr. Martin Lindsay: It is, perhaps, unfortunate that this debate has lasted an hour and a quarter shorter than usual, because, owing to the luck of your draw, Mr. Speaker, it appeared that all of us on this side were united behind the Prime Minister. It is, however, within my knowledge that certainly three hon. Members, of whom I am one, wished to say with the very greatest regret that we were not able to follow the Prime Minister into the Lobby tonight.
I can speak only for myself and I can but say that in my opinion the Government have not shown adequate leadership in dealing with this problem of inflation. In my opinion, the general statements and warnings given by the Chancellor of the Exchequer serve no purpose unless they are addressed to those who actually have the responsibility of dealing with


this matter: that is, the employers, both in the nationalised industries and in the private sector of industry, and also the trade unions. What is necessary is that the Government today should say that they regard it as an unpatriotic act either to formulate or concede wage claims which are not related to higher production or to increase dividends.
I believe that that is a definite policy which the Government should recommend

to those responsible, for a period of perhaps eighteen months, in order to stabilise prices, which are causing despair to large sections of the nation—[HON. MEMBERS: "Divide."]—and, even more important, at the same time, damaging the export trade.

Question put, That this House doth agree with the Committee in the said Resolution:—

The House divided: Ayes 304, Noes 241.

Division No. 175.]
AYES
[9.30 p.m.


Agnew, Sir Peter
Deedes, W. F.
Hirst, Geoffrey


Aitken, W. T.
Dodds-Parker, A. D.
Hobson, John (Warwick &amp; Leam'gt'n)


Allan, R. A. (Paddington, S.)
Donaldson, Cmdr. C. E. McA.
Holland-Martin, C. J.


Alport, C J. M.
Doughty, C. J. A.
Hope, Lord John


Amery, Julian (Preston, N.)
Drayson, G. B.
Hornby, R. P.


Amory, Rt. Hn. Heathcoat (Tiverton)
du Cann, E. D. L.
Hornsby-Smith, Miss M. P.


Arbuthnot, John
Dugdale, Rt. Hn. Sir T. (Richmond)
Horobin, Sir Ian


Armstrong, C. W.
Duncan, Capt. J. A. L.
Horsbrugh, Rt. Hon. Dame Florence


Ashton, H.
Duthie, W. S.
Howard, Gerald (Cambridgeshire)


Astor, Hon. J. J.
Eccles, Rt. Hon. Sir David
Howard, Hon. Greville (St. Ives)


Atkins, H. E.
Eden, J. B. (Bournemouth, West)
Howard, John (Test)


Baldock, Lt.-Cmdr. J. M.
Elliot, Rt. Hon. W. E. (Kelvingrove)
Hudson, W. R. A. (Hull, N.)


Baldwin, A. E.
Elliott, R. W. (N'castle upon Tyne, N.)
Hughes Hallett, Vice-Admiral J.


Balniel, Lord
Emmet, Hon. Mrs. Evelyn
Hughes-Young, M. H. C.


Barber, Anthony
Erroll, F. J.
Hulbert, Sir Norman


Barlow, Sir John
Finlay, Graeme
Hurd, A. R.


Barter, John
Fisher, Nigel
Hutchison, Michael Clark (E'b'gh, S.)


Baxter, Sir Beverley
Fletcher-Cooke, C.
Hyde, Montgomery


Beamish, Maj. Tufton
Forrest, G.
Hylton-Foster, Rt. Hon. Sir Harry


Bell, Philip (Bolton, E.)
Fort, R.
Iremonger, T. L.


Bell, Ronald (Bucks, S.)
Foster, John
Irvine, Bryant Godman (Rye)


Bennett, F. M. (Torquay)
Fraser, Hon. Hugh (Stone)
Jenkins, Robert (Dulwich)


Bennett, Dr. Reginald
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Jennings, J. C. (Burton)


Bevins, J. R.(Toxteth)
Freeth, Denzil
Jennings, Sir Roland (Hallam)


Bidgood, J. C.




Biggs-Davison, J. A.
Galbraith, Hon. T. G. D.
Johnson, Dr. Donald (Carlisle)


Birch, Rt. Hon. Nigel
Gammans, Lady
Johnson, Eric (Blackley)


Bishop, F. P.
Garner-Evans, E. H.
Johnson, Howard (Kemptown)


Black, C. W.
George, J. C. (Pollok)
Jones, Rt. Hon. Aubrey (Hall Green)


Body, R. F.
Gibson-Watt, D.
Joseph, Sir Keith


Bossom, Sir Alfred
Glover, D.
Joynson-Hicks, Hon. Sir Lancelot


Boyle, Sir Edward
Glyn, Col. R.
Kaberry, D.


Braine, B. R.
Godber, J. B.
Kerby, Capt. H. B.


Braithwaite, Sir Albert (Harrow, W.)
Gomme-Duncan, Col. Sir Alan
Kerr, Sir Hamilton


Bromley-Davenport, Lt.-Col. W. H.
Goodhart, Philip
Kershaw, J. A.


Brooman-White, R. C.
Gough, C. F. H.
Kimball, M.


Browne, J. Nixon (Craigton)
Gower, H. R.
Kirk, P. M.


Bullus, Wing Commander E. E.
Graham, Sir Fergus
Lagden, C. W.


Burden, F. F. A.
Grant, W. (Woodside)
Lambert, Hon. G.


Butcher, Sir Herbert
Grant-Ferris, Wg Cdr. R.(Nantwich)
Leather, E. H. C.


Campbell, Sir David
Green, A.
Leavey, J. A.


Carr, Robert
Gresham Cooke, R.
Leburn, W. G.


Cary, Sir Robert
Grimston, Hon. John (St. Albans)
Legge-Bourke, Maj. E. A. H.


Channon, Sir Henry
Grimston, Sir Robert (Westbury)
Legh, Hon. Peter (Petersfield)


Chichester-Clark, R.
Grosvenor, Lt.-Col. R. G.
Lennox-Boyd, Rt. Hon. A. T.


Churchill, Rt. Hon. Sir Winston
Gurden, Harold
Linstead, Sir H. N.


Clarke, Brig. Terence (Portsmth, W.)
Hall, John (Wycombe)
Lloyd, Rt. Hon. G. (Sutton Coldfield)


Cole, Norman
Hare, Rt. Hon. J. H.
Lloyd, Rt. Hon. Selwyn (Wirral)


Conant, Maj. Sir Roger
Harris, Reader (Heston)
Longden, Gilbert


Cooke, Robert
Harrison, A. B. C. (Maldon)
Low, Rt. Hon. A. R. W.


Cooper, A. E.
Harrison, Col. J. H. (Eye)
Lucas, Sir Jocelyn (Portsmouth, S.)


Cooper-Key, E. M.
Harvey, Sir Arthur Vere (Macclesfd)
Lucas, P. B. (Brentford &amp; Chiswick)


Cordeaux, Lt.-Col. J. K.
Harvey, Ian (Harrow, E.)
Lucas-Tooth, Sir Hugh


Craddock, Beresford (Spelthorne)
Harvey, John (Walthamstow, E.)
McAdden, S. J.


Crosthwaite-Eyre, Col. O. E.
Harvie-Watt, Sir George
Macdonald, Sir Peter


Crowder, Sir John (Finchley)
Hay, John
Mackeson, Brig. Sir Harry


Crowder, Petre (Ruislip—Northwood)
Heald, Rt. Hon. Sir Lionel
McKibbin, A. J.


Cunningham, Knox
Henderson, John (Cathcart)
Mackie, J. H. (Galloway)


Currie, G. B. H.
Henderson-Stewart, Sir James
McLaughlin, Mrs. P.


Dance, J. C. G.
Hesketh, R. F.
Maclay, Rt. Hon. John


Davidson, Viscountess
Hill, Rt. Hon. Charles (Luton)
Maclean, Sir Fitzroy (Lancaster)


D'Avigdor-Goldsmid, Sir Henry
Hill, Mrs. E. (Wythenshawe)
McLean, Neil (Inverness)




Macleod, Rt. Hn. Iain (Enfield, W.)
Pilkington, Capt. R. A.
Storey, S.


MacLeod, John (Ross &amp; Cromarty)
Pitman, I. J.
Stuart, Rt. Hon. James (Moray)


Macmillan, Rt. Hn. Harold (Bromley)
Pott, H. P.
Studholme, Sir Henry


Macmillan, Maurice (Halifax)
Powell, J. Enoch
Summers, Sir Spencer


Macpherson, Niall (Dumfries)
Price, David (Eastleigh)
Sumner, W. D. M. (Orpington)


Maddan, Martin
Prior-Palmer, Brig. O. L.
Taylor, Sir Charles (Eastbourne)


Maitland, Cdr. J. F. W.(Horncastle)
Profumo, J. D.
Taylor, William (Bradford, N.)


Maitland, Hon. Patrick (Lanark)
Raikes, Sir Victor
Teeling, W.


Manningham-Buller, Rt. Hn. Sir R.
Ramsden, J. E.
Temple, John M.


Markham, Major Sir Frank
Rawlinson, Peter
Thomas, Leslie (Canterbury)


Marlowe, A. A. H.
Redmayne, M.
Thomas, P. J. M. (Conway)


Marples, Rt. Hon. A. E.
Remnant, Hon. P.
Thompson, Kenneth (Walton)


Marshall, Douglas
Renton, D. L. M.
Thompson, Lt.-Cdr. R.(Croydon, S.)


Mathew, R.
Ridsdale, J. E.
Thorneycroft, Rt. Hon. P.


Maudling, Rt. Hon. R.
Rippon, A. G. F.
Thornton-Kemsley, C. N.


Mawby, R. L.
Roberts, Sir Peter (Heeley)
Tiley, A. (Bradford, W.)


Medlicott, Sir Frank
Robertson, Sir David
Tilney, John (Wavertree)


Milligan, Rt. Hon. W. R.
Robinson, Sir Roland (Blackpool, S.)
Turton, Rt. Hon. R. H.


Moore, Sir Thomas
Robson Brown, Sir William
Tweedsmuir, Lady


Morrison, John (Salisbury)
Rodgers, John (Sevenoaks)
Vane, W. M. F.


Mott-Radclyffe, Sir Charles
Roper, Sir Harold
Vaughan-Morgan, J. K.


Nabarro, G. D. N.
Ropner, Col. Sir Leonard
Vickers, Miss Joan


Nairn, D. L. S.
Russell, R. S.
Wakefield, Edward (Derbyshire, W.)


Neave, Airey
Sandys, Rt. Hon. D.
Wakefield, Sir Wavell (St. M'lebone)


Nicholls, Harmar
Schofield, Lt.-Col. W.
Walker-Smith, Rt. Hon. Derek


Nicholson, Godfrey (Farnham)
Scott-Miller, Cmdr. R.
Wall, Major Patrick


Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Sharples, R. C.
Ward, Rt. Hon. G. R. (Worcester)


Noble, Comdr. Rt. Hon. Allan
Shepherd, William
Ward, Dame Irene (Tynemouth)


Nugent, G. R. H.
Simon, J. E. S. (Middlesbrough, W.)
Waterhouse, Capt. Rt. Hon. C.


O'Neill, Hn. Phelim(Co. Antrim, N.)
Smithers, Peter (Winchester)
Watkinson, Rt. Hon. Harold


Ormsby-Gore, Rt. Hon. W. D.
Smyth, Brig. Sir John (Norwood)
Webbe, Sir H.


Orr, Capt. L. P. S.
Soames, Christopher
Whitelaw, W. S. I.


Orr-Ewing, Charles Ian (Hendon, N.)
Spearman, Sir Alexander
Williams, Paul (Sunderland, S.)


Orr-Ewing, Sir Ian (Weston-S-Mare)
Speir, R. M.
Williams, R. Dudley (Exeter)


Osborne, C.
Spence, H. R. (Aberdeen, W.)
Wills, G. (Bridgwater)


Page, R. G.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Wood, Hon. R.


Pannell, N. A. (Kirkdale)
Stanley, Capt. Hon. Richard
Woollam, John Victor


Partridge, E.
Stevens, Geoffrey
Yates, William (The Wrekin)


Peyton, J. W. W.
Steward, Harold (Stockport, S.)



Pickthorn, K. W. M.
Steward, Sir William (Woolwich, W.)
TELLERS FOR THE AYES:


Pike, Miss Mervyn
Stoddart-Scott, Col. Sir Malcolm
Mr. Heath and Mr. Oakshott.




NOES


Ainsley, J. W.
Collick, P. H. (Birkenhead)
Grimond, J.


Albu, A. H.
Collins, V. J.(Shoreditch &amp; Finsbury)
Hale, Leslie


Allaun, Frank (Salford, E.)
Corbet, Mrs. Freda
Hall, Rt. Hn. Glenvil (Colne Valley)


Allen, Arthur (Bosworth)
Cove, W. G.
Hamilton, W. W.


Allen, Scholefield (Crewe)
Craddock, George (Bradford, S.)
Hannan, W.


Anderson, Frank
Cronin, J. D.
Harrison, J. (Nottingham, N.)


Awbery, S. S.
Crossman, R. H. S.
Hastings, S.


Bacon, Miss Alice
Cullen, Mrs. A.
Hayman, F. H.


Baird, J.
Davies, Ernest (Enfield, E.)
Herbison, Miss M.


Balfour, A.
Davies, Harold (Leek)
Hewitson, Capt. M.


Bellenger, Rt. Hon. F. J.
Davies, Stephen (Merthyr)
Holman, P.


Bence, C. R. (Dunbartonshire, E.)
Deer, G.
Holmes, Horace


Benn, Hn. Wedgwood (Bristol, S.E.)
de Freitas, Geoffrey
Holt, A. F.


Benson, G.
Delargy, H. J.
Houghton, Douglas


Beswick, Frank
Dodds, N. N.
Howell, Charles (Perry Barr)


Bevan, Rt. Hon. A. (Ebbw Vale)
Donnelly, D. L.
Hoy, J. H.


Blackburn, F.
Dugdale, Rt. Hn. John (W. Brmwch)
Hubbard, T. F.


Blenkinsop, A.
Dye, S.
Hughes, Cledwyn (Anglesey)


Blyton, W. R.




Boardman, H.
Edwards, Rt. Hon. John (Brighouse)
Hughes, Hector (Aberdeen, N.)


Bottomley, Rt. Hon. A. G.
Edwards, Rt. Hon. Ness (Caerphilly)
Hunter, A. E.


Bowden, H. W. (Leicester, S.W.)
Edwards, Robert (Bilston)
Hynd, J. B. (Attercliffe)


Bowles, F. G.
Edwards, W. J. (Stepney)
Irvine, A. J. (Edge Hill)


Braddock, Mrs. Elizabeth
Evans, Albert (Islington, S.W.)
Isaacs, Rt. Hon. G. A.


Brockway, A. F.
Ferrryhough, E.
Janner, B.


Broughton, Dr. A. D. D.
Fienburgh, W.
Jay, Rt. Hon. D. P. T.


Brown, Rt. Hon. George (Belper)
Finch, H. J.
Jeger, George (Goole)


Brown, Thomas (Ince)
Fletcher, Eric
Jeger, Mrs. Lena(Holbn &amp; St.Pncs, S.)


Burke, W. A.
Forman, J. C.
Jenkins, Roy (Stechford)


Butler, Herbert (Hackney, C.)
Fraser, Thomas (Hamilton)
Johnson, James (Rugby)


Butler, Mrs. Joyce (Wood Green)
Gaitskell, Rt. Hon. H. T. N.
Johnston, Douglas (Paisley)


Callaghan, L. J.
George, Lady Megan Lloyd(Car'then)
Jones, Rt. Hon. A. Creech(Wakefield)


Carmichael, J.
Gibson, C. W.
Jones, David (The Hartlepools)


Castle, Mrs. B. A.
Gordon Walker, Rt. Hon. P. C.
Jones, Jack (Rotherham)


Champion, A. J.
Greenwood, Anthony
Jones, J. Idwal (Wrexham)


Chapman, W. D.
Grenfell, Rt. Hon. D. R.
Jones, T. W. (Merioneth)


Chetwynd, G. R.
Grey, C. F.
Key, Rt. Hon. C. W.


Clunie, J.
Griffiths, David (Bother Valley)
King, Dr. H. M.


Coldrick, W.
Griffiths, Rt. Hon. James (Llanelly)
Lawson, G. M.







Ledger, R. J.
Parker, J,
Strachey, Rt. Hon. J.


Lee, Frederick (Newton)
Parkin, B. T.
Strauss, Rt. Hon. George (Vauxhall)


Lee, Miss Jennie (Cannock)
Paton, John
Stross, Dr. Barnet t(Stoke-on-Trent, C)


Lever, Harold (Cheetham)
Peart, T. F.
Summerskill, Rt. Hon. E.


Lever, Leslie (Ardwick)
Pentland, N.
Swingler, S. T.


Lindgren, G. S.
Plummer, Sir Leslie
Sylvester, G. O.


Lipton, Marcus
Price, J. T. (Westhoughton)
Taylor, Bernard (Mansfield)


Logan, D. G.
Price, Philips (Gloucestershire, W.)
Taylor, John (West Lothian)


Mabon, Dr. J. Dickson
Probert, A. R.
Thomas, George (Cardiff)


MacColl, J. E.
Proctor, W. T.
Thomas, Iorwerth (Rhondda, W.)


MacDermot, Niall
Pryde, D. J.
Thornton, E.


McInnes, J.
Randall, H. E.
Timmons, J.


McKay, John (Wallsend)
Rankin, John
Tomney, F.


MacPherson, Malcolm (Stirling)
Redhead, E. C.
Ungoed-Thomas, Sir Lynn


Mahon, Simon
Reeves, J.
Usborne, H. C.


Mallalieu, E. L. (Brigg)
Reid, William
Viant, S. P.


Mallalieu, J. P. W. (Huddersfd, E.)
Rhodes, H.
Watkins, T. E.


Mann, Mrs. Jean
Robens, Rt. Hon. A.
Weitzman, D.


Mason, Roy
Roberts, Albert (Normanton)
Wells, Percy (Faversham)


Mayhew, C. P.
Roberts, Goronwy (Caernarvon)
Wells, William (Walsall, N.)


Mellish, R. J.
Robinson, Kenneth (St. Pancras, N.)
West, D. G.


Messer, Sir F.
Rogers, George (Kensington, N.)
Wheeldon, W. E.


Mikardo, Ian
Ross, William
White, Mrs. Eirene (E. Flint)


Mitchison, G. R.
Royle, C.
White, Henry (Derbyshire, N.E.)


Monslow, W.
Shawcross, Rt. Hon. Sir Hartley
Wigg, George


Moody, A. S.
Shinwell, Rt. Hon. E.
Wilcock, Group Capt. C. A. B.


Morris, Percy (Swansea, W.)
Short, E. W.
Wilkins, W. A.


Morrison, Rt. Hn. Herbert (Lewis'm, S.)
Shurmer, P. L. E.
Willey, Frederick


Mort, D. L.
Silverman, Julius (Aston)
Williams, David (Neath)


Moss, R.
Silverman, Sydney (Nelson)
Williams, Rev. Llywelyn (Ab'tillery)


Moyle, A.
Simmons, C. J. (Brierley Hill)
Williams, Ronald (Wigan)


Mulley, F. W.
Skeffington, A. M.
Williams, W. R. (Openshaw)


O'Brien, Sir Thomas
Slater, Mrs. H. (Stoke, N.)
Williams, W. T. (Barons Court)


Oliver, G. H.
Slater, J. (Sedgefield)
Willis, Eustace (Edinburgh, E.)


Oram, A. E.
Smith, Ellis (Stoke, S.)
Wilson, Rt. Hon. Harold (Huyton)


Orbach, M.
Snow, J. W.
Winterbottom, Richard


Oswald, T.
Sorensen, R. W.
Woodburn, Rt. Hon. A.


Padley, W. E.
Soskice, Rt. Hon. Sir Frank
Woof, R. E.


Paget, R. T.
Sparks, J. A.
Yates, V. (Ladywood)


Paling, Rt. Hon. W. (Dearne Valley)
Steele, T.
Zilliacus, K.


Palmer, A. M. F.
Stewart, Michael (Fulham)



Pannell, Charles (Leeds, W.)
Stonehouse, John
TELLERS FOR THE NOES:


Pargiter, G. A.
Stones, W. (Consett)
Mr. Popplewell and Mr. Pearson.

It being after half-past Nine o'clock, Mr. SPEAKER proceeded, pursuant to Standing Order No. 16 (Business of Supply), to put forthwith the Questions, That this House doth agree with the Committee in the outstanding Resolutions reported in respect of Classes I to X of the Civil Estimates and of the Revenue Departments' Estimates, the Ministry of Defence Estimate, the Navy Estimates, the Army Estimates and the Air Estimates.

CIVIL ESTIMATES AND SUPPLEMENTARY ESTIMATE, 1957–58

CLASS I

CENTRAL GOVERNMENT AND FINANCE

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class I of the Civil Estimates,

put, and agreed to.

CLASS II

COMMONWEALTH AND FOREIGN

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class II of the Civil Estimates,

put, and agreed to.

CLASS III

HOME DEPARTMENT, LAW AND JUSTICE

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class III of the Civil Estimates,

put, and agreed to.

CLASS IV

EDUCATION AND BROADCASTING

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class IV of the Civil Estimates,

put, and agreed to.

CLASS V

HEALTH, HOUSING AND LOCAL GOVERNMENT

Question,
That this House doth agree with the Committee in the outstanding Resolutions reported in respect of Class V of the Civil Estimates.

put, and agreed to.

CLASS VI

TRADE, LABOUR AND SUPPLY

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class VI of the Civil Estimates.

put, and agreed to.

CLASS VII

COMMON SERVICES (WORKS. STATIONERY, &C.)

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class VII of the Civil Estimates.

put, and agreed to.

CLASS VIII

AGRICULTURE AND FOOD

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class VIII of the Civil Estimates.

put, and agreed to.

CLASS IX

TRANSPORT, POWER, AND INDUSTRIAL RESEARCH

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class IX of the Civil Estimates.

put, and agreed to.

CLASS X

PENSIONS, NATIONAL INSURANCE AND NATIONAL ASSISTANCE

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of Class X of the Civil Estimates.

put, and agreed to.

ESTIMATES FOR REVENUE DEPARTMENTS AND SUPPLEMENTARY ESTIMATE, 1957–58

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of the Revenue Departments Estimates,

put, and agreed to.

MINISTRY OF DEFENCE ESTIMATE, 1957–58

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of the Ministry of Defence Estimate.

put, and agreed to.

NAVY ESTIMATES. 1957–58

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of the Navy Estimates.

put, and agreed to.

ARMY ESTIMATES. 1957–58

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of the Army Estimates,

put, and agreed to.

AIR ESTIMATES. 1957–58

Question,
That this House doth agree with the Committee in the outstanding Resolution reported in respect of the Air Estimates.

put, and agreed to.

WAYS AND MEANS [24th July]

Resolution reported,
That, towards making good the Supply granted to Her Majesty for the service of the year ending on the 31st day of March, 1958, the sum of £2,714,863,319 be granted out of the Consolidated Fund of the United Kingdom.

Resolution agreed to.

Bill ordered to be brought in upon the said Resolution by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Mr. Powell.

CONSOLIDATED FUND (APPROPRIATION)

Bill to apply a sum out of the Consolidated Fund to the service of the year ending on the thirty-first day of March, one thousand nine hundred and fifty-eight, and to appropriate the supplies granted in this Session of Parliament, presented accordingly and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 122.]

AGRICULTURE BILL

Lords Amendments considered.

Clause 4.—(APPLICATION TO SUGAR BEET PRICES.)

Lords Amendment: In page 5, line 48, leave out "and".

9.46 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I beg to move, That this House doth agree with the Lords in the said Amendment.
It may be convenient also to discuss the next five Amendments.

Mr. Speaker: That will be convenient.

Mr. Godber: These Amendments are drafting Amendments, in that they refer to the position of sugar beet within the long-term guarantees. The original wording of the Clause did not give us all that we wished in respect of bringing sugar beet entirely within Clause 2, subsections (3)and (4). That was corrected in the Amendments in another place.

Mr. Frederick Willey: I rise only to say that we accept this and the following Amendments as being Amendments which will make the Bill clearer.

Question put and agreed to.

Further Lords Amendments made: In page 5, line 49, leave out "or to be determined".

In page 6, line 1, after "order" insert:
and to the arrangements in force under the said section one".

In line 2, after "references" insert "respectively".

In line 3, leave out from "1956" to first "for" in line 4 and insert:
to the prices initially determined under the said section seventeen".

In line 5, at end add:
and to the arrangements in force under the said section seventeen, and the power to give directions under the proviso to subsection (4)of section two of this Act shall be exercisable in relation to home grown beet as if any directions under the said section seventeen were an order under the said section one."—[Mr. Godber.]

Clause 12.—(GRANTS FOR LONG TERM IMPROVEMENTS OF AGRICULTURAL LAND.)

Lords Amendment: In page 11, line 33, at end insert:
himself or to pay compensation (whether or not he was liable under any enactment to do so)to a tenant for making it".

Mr. Godber: I beg to move, That this House doth agree with the Lords in the said Amendment.
This Amendment makes a slight modification to the terms of the prudent landlord test to which we attach very considerable importance. The point here is that there was some possible doubt about the position of improvements carried out by tenants with the landlord's consent. This Amendment seeks to cover that point fully so that there will be no doubt in cases like this. I think that it will prove to be welcome to the industry generally.

Question put and agreed to. [Special Entry.]

Clause 13.—(AMOUNT AND PAYMENT OF GRANTS UNDER s. 12.)

Lords Amendment: In page 12, line 7, after "regulations" insert:
or of a specified part of any such improvement".

Mr. Godber: I beg to move, That this House doth agree with the Lords in the said Amendment.
It may be convenient to discuss with this Amendment the one following, in page 12, line 14.
The Amendments modify the provision for standard costs in the Clause and are of definite help, particularly to those hon. Members who attach a great deal of importance to the question of the farmer's own labour coming within its scope. Very briefly, the point is that the Amendment will enable part of a scheme to be covered by standard costs. This, we believe, will help in many cases where a farmer himself wishes to put in the foundations and to do that type of work, which he may be able to manage quite safely, while having to employ a contractor for the rest of the work. By incorporating this and the following Amendment we think that the Clause is strengthened, and I commend them to the House

Mr. Willey: We agree that the Amendments will improve the Bill and make its administration easier.

Question put and agreed to. [Special Entry.]

Further Lords Amendment made: In page 12, line 14, leave out "subject" and insert:
or, where the regulations make provision for the cost of part only of an improvement, one-third of the sum of the amount so specified for that part and of the actual cost (so far as approved by the Minister as having been reasonably incurred)of the remainder of the improvement, subject in either case."—[Mr. Godber.]

Clause 14.—(REVOCATION OF APPROVAL AND RECOVERY OF GRANT.)

Lords Amendment: In page 12, line 32, leave out from "Minister" to "an" in line 35 and insert:

"(a)shall, if so requested, give to any person who appears to him to have an interest in the land concerned or to whom the relevant grant would be payable, a written notification of the reasons for the proposed revocation; and
(b)shall afford to every such person".

Mr. Godber: I beg to move, That this House doth agree with the Lords in the said Amendment.
For this Amendment we are indebted to the other side of the House, in that they initiated it, and we are glad to accept it. The point of the Amendment is that it requires the Minister, before using his power to revoke his approval to a proposed improvement for grant upon any of the grounds specified in subsection (1)and on request of any person who claims to have an interest in the land or is the person to whom the grant would be payable, to provide a written notification of the reasons for the proposed revocation.
We discussed some aspects of this matter in Committee. We were unable to do what hon. Members opposite wished on that occasion, but in accepting the Amendment we have gone some part of the way to meeting them, and I hope that they will think that this is an improvement to the Bill.

Mr. Willey: We are also indebted to the Joint Parliamentary Secretary for his partial acceptance of the case that we made in Committee. We were anxious that in a case such as this, if representations were made to an inspector and, in turn, reported to the Minister, that that report should be available to the person

whose grant had been revoked. The Joint Parliamentary Secretary explained that he was not willing to go as far as we wished him to go, and we appreciated the difficulty of doing that whilst we were awaiting the Franks Report.
We accept the Amendment as going part of the way. At any rate the applicant will be advised as to the grounds upon which the application has been revoked. I understand from the discussion upon the Amendment in another place that the Government were in fact prepared to go further, and that if the Minister revokes a grant he will give reasons for the revocation. This again helps generally in providing the person concerned at any rate with the consolation of knowing the grounds upon which the right hon. Gentleman has revoked the grant. We accept the Amendment.

Mr. Godber: The hon. Gentleman is quite right. My noble Friend did say that, administratively, we would go even further.

Question put and agreed to.

Clause 17.—(AMOUNT AND PAYMENT OF GRANTS UNDER S. 16.)

Lords Amendment: In page 14, line 15, leave out from "Minister" to end of line 17 and insert:

"(a)shall, if so requested, give to any person who appears to him to have an interest in the land concerned or to whom the relevant grant would be payable, a written notification of the reasons for the proposed revocation; and
(b)shall afford to every such person".

Mr. Godber: I beg to move, That this House doth agree with the Lords in the said Amendment.
This is an identical Amendment, relating to Clause 17, dealing with the point of amalgamation. It is perfectly straightforward.

Question put and agreed to.

Second Schedule.—(IMPROVEMENTS ELIGIBLE FOR GRANT UNDER S. 12.)

Lords Amendment: In page 25, line 26, leave out "and bridges" and insert "bridges, railway crossings and creeps".

Mr. Godber: I beg to move, That this House doth agree with the Lords in the said Amendment.
This Amendment adds to the schedule of improvements which may be grant-aided railway crossings and creeps to


enable farm traffic to cross railway lines, usually referred to as "accommodation crossings." The Schedule as it stood when it left this House would have covered these in some cases but not all. If the crossing was a bridge or was linked to a stretch of farm road it would have been eligible, but if it was a creep or simply connected two fields it would not have been. The Amendment brings these classes of case in completely.

Mr. Willey: On the understanding that "creep" is a technical term and not a word of abuse, we accept the Amendment.

Question put and agreed to. [Special Entry.]

WHITE FISH AND HERRING SUBSIDIES

9.55 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Derick Heathcoat Amory): I bee to move,
That the White Fish Subsidy (United Kingdom)Scheme, 1957, dated 12th July 1957, a copy of which was laid before this House on 15th July, be approved.

Mr. Speaker: Would it be convenient to both sides of the House to take this and the Herring Subsidy Scheme together?

Mr. A. Woodburn: It would be convenient to discuss them together.

Mr. Speaker: Of course, they will be separate Questions and can be divided on.

Mr. Amory: I am obliged, Mr. Speaker. I think that that course will prove to be for the convenience of the House, because in some respects the two Schemes are closely related.
As the hour is rather late, and as I know that a number of hon. Members wish to raise points on these Schemes, I shall be very brief indeed in my introductory remarks. I want to begin with the White Fish subsidy to the near-and middle-water fleet. This year, after reviewing all the facts and figures, we have decided to leave the rates unchanged for the coming year. The industry put forward a case to us for a substantial increase because there have been significant increases in costs during the year, but we concluded that it would

not be right to make an increase in subsidies this year for two reasons. The first is that the cost of operations and the proceeds of sales must be looked at together, and after looking at them both together we think that the balance should prove to be better than the industry fears.
I do not dispute that operating results for the country as a whole are likely to be less satisfactory this year than in 1956, but we have to look at this matter in the light of our long-term policy for the industry. Once more, I want to remind the House—I have done so on a number of occasions—that these subsidies are intended to tide the near and middle water fleets over a difficult period of adjustment while the old coal-burning vessels are being replaced by a smaller fleet of much more efficient modern boats.
We are greatly assisting the modernisation programme by grants and loans for building new vessels and grants for the conversion of coal-burning vessels to oil burning. Taking the country as a whole, that policy in general is going well. In the past four years about half the coal burners have been withdrawn and new vessels have been built as fast as the yards have been able to turn them out. The exact figure of coal burners now remaining in the fleet is 333, and if the present rate of scrapping continues the coal-burning vessels will be virtually eliminated within the next four years. The new oil-burning or diesel vessels should be able to operate without subsidy within a few years.
I emphasise that that is the assumption behind the Act that we passed earlier this year. Our view is that the subsidy ought to be progressively reduced and eventually removed altogether. We recognise that that process will bear hardly on some ports. and particularly on some ports in Scotland, but even in Scotland the proceeds of sales this year are considerably up on those for last year.
On this basis we felt that we simply could not contemplate an increase in the subsidy this year for the near and middle water fleet. If the coal burners should be scrapped at an accelerated rate in consequence of our not having increased the subsidy, we do not believe that it will result in harm being done to the real interests of the industry as a whole or to those of the country.
While, in general, the policy has been working well, the modernisation programme has gone ahead more rapidly in England than in Scotland. Even in England it has gone considerably faster in some ports than in others. The greatest difficulty in the coming period is likely to occur in Scotland. It is sad that the results so far, from the first few diesel vessels operating in Scotland last year, have been disappointing, but it is too early to judge the real prospects from the first season's fishing.
We hope that the Scottish owners will find that diesel trawlers can be as profitably operated from Scottish ports as from English ports. If not, we may have to see some part of the Scottish trawling fleet replaced by other kinds of fishing vessels; but that is the sort of point that we are anxious that the committee of inquiry, on which I wish to say a word in a moment, should go into.
I would mention one change in the details of the scheme. At the request of the trawler owners we have decided to remove the limit of 300 days at sea, which was the maximum for which a vessel could receive subsidy in one year. The purpose is to avoid discouraging all-out fishing.
The Inshore Fishermen's Associations for England and Wales have not asked for an increase this year. The Scottish inshore fishermen's prospects seem rather less favourable this year than last year but, I am advised, inshore fishing has expanded considerably in the past two years, and the number of Scottish seiners has increased by one-sixth and their catch by one-third.
So, overall, and considering the prospect very carefully from all the evidence we have been able to collect, in the case of inshore fishermen we have had to conclude that the position did not justify any increase in the subsidy this year. In fact, if we were to raise the subsidy we should be largely defeating the object of the subsidy which was given to the herring boats recently. That object was to reverse the drift from herring fishing to white fish catching.
In the herring fleet, costs have gone up, and we cannot safely assume that the proceeds of sales during this year or in the near future are likely to increase. The present subsidy, which the House

will remember was instituted a few months ago, does not seem, on present evidence, to be likely to attract vessels back to herring fishing from white fishing.
So here we are proposing to increase the existing daily rates by £1 a day for all motor vessels up to 80 feet in length, by £2 a day for those vessels over 80 feet. and by £1 a day in the case of steam vessels. The rate per stone in the case of vessels under 40 feet is to be increased from 3d. to 3½d. At these new rates the herring subsidy which last year cost about £125,000, is estimated to cost £350,000.
We do not intend to restore the oil and and meal subsidy which was terminated when the new subsidy on the fish landed was introduced a few months ago, because we want to place the emphasis so far as we possibly can on the incentive to catch fish that are suitable for the more remunerative home and export markets.
These are our proposals for the coming year formulated in the light of our general policy. I believe that experience to date has shown that the policy is a sound one and meeting with considerable success. At the same time, as I have said, progress in some ports has been disappointingly slow and not all the new vessels are doing quite as well as was hoped and expected. So we have come to the conclusion that the time is right for a full re-assessment of the position and prospects of the fishing industry.
We have decided, as I told the House last week, to appoint an independent committee of inquiry. We want that committee to make an assessment of the size and the pattern of an economic fishing industry and to study the implications of the present trends and technical developments. I should like to emphasise that that inquiry will cover the United Kingdom as a whole and not only those sections of the industry which receive grants, loans and subsidies. It will also cover the unsubsidised distant water fleet. After all, the fishing industry must be considered basically as a single whole because that is what it is.

Mr. Douglas Marshall: Will it cover lobsters and crabs?

Mr. Amory: Yes, I think that it will cover the whole of the fishing industry.


We believe that an independent committee will be of great help to us in making an objective appreciation of the present situation and of the situation that is developing if present trends continue. It will study, for instance, the implication of present trends on particular ports. I want to make it clear beyond any question whatever that the appointment of this committee implies no lack of confidence in either the White Fish Authority or the Herring Industry Board. The Authority and the Board are, of course, executive bodies with important tasks on their hands. They have done and are doing most valuable work, and they need to be free to devote their main energies to continuing that work.
This committee will be considering the whole of the fishing industry and will assess the economic and social implications of its judgment of future developments. The Authority and the Board, on the other hand, are each concerned only with sections of the industry. Therefore, we believe that the right course is that the Authority and the Board should be able to give the committee their first hand knowledge and experience of the industry, and I believe that will be of the greatest value to it.

Mr. Hector Hughes: Is the right hon. Gentleman suggesting that this committee is to be completely representative of the whole industry as against the two bodies to which he has referred? Will he indicate what representatives of the various phases of the fishing industry are to be upon it?

Mr. Deputy-Speaker (Sir Gordon Touche): The right hon. Gentleman will not go too far in explaining the position of the committee as the committee is not included in the Scheme.

Mr. Amory: I shall not be following that matter of the committee any further, because later on I shall be announcing the composition and terms of reference of the committee. It will not be a representative committee—

Mr. Hector Hughes: Not representative?

Mr. Amory: Not representative of the different sections. If I pursued that question, Mr. Deputy-Speaker, I should get into trouble with your. Both the White

Fish Authority and the Herring Industry Board will do everythng in their power to help when the committee is appointed.
This Scheme deals with the white fish industry. The House will be interested to know that the Secretary of State for Scotland and I have asked Sir Louis Chick to continue as Chairman of the White Fish Authority for a further two years. The House will be glad to know that Sir Louis Chick has accepted that further appointment.
Once again I should like to pay tribute, in which I am certain the whole House will join, to all who earn their livelihood in our fishing industry. In these debates we do not forget the hazards our fishermen inevitably face in pursuing their calling and the resolute and cheerful spirit in which they face them. They serve the nation well, and we on our part are resolved that our proper obligations to the industry shall be faithfully performed.
I hope the House will agree that, against the background of the general policy, I have described the subsidy rates that we are now fixing for the coming year are such as will sustain the welfare and vigour of this essential national industry.

10.14 p.m.

Mr. A. J. Champion: I cannot help feeling that the Minister has been a little less courteous than he usually is to this side of the House. I am rather surprised that tonight he did not advise us he intended to ask Mr. Speaker to allow these two Schemes to be discussed together.

Mr. Amory: I was asked whether it would be for the convenience of the House to do so. I said that in my opinion it might be, and I should have thought that it was.

Mr. Champion: I beg the pardon of the right hon. Gentleman. I thought this must have been an arrangement about which we had not been advised. Usually, we are advised when Mr. Speaker is to be asked that two Schemes be discussed together. Obviously, that has not happened in this case.

Mr. Amory: I, too, beg the pardon of the hon. Member if there has been any discourtesy. I was of opinion from the beginning that it would be for the


convenience of the House to discuss these two Schemes together.

Mr. Champion: I am not protesting against discussing the two together, but, at the same time, it is better that the Opposition should be informed of such an arrangement. I propose to start my speech by referring to the White Fish Authority and my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn)will address himself to the herring industry subsidy.
This White Fish Authority subsidy was started under the Labour Government on a six-monthly basis and it continued until 1953 when the present Administration extended it to give the industry five years to put itself in order; to apply modern methods to the task of catching fish and to modernise the fishing fleet. As was said last year by the Minister, it was to encourage the development of a modern self-sufficient fishing fleet. The subsidy has been extended until 1961, and I should like to know on what the Minister bases his hopes that in that period it will be possible to end the subsidy and make the industry completely self-sufficient. Hon. Members on this side of the House are anxious to see a fleet which is self-sufficient. That is the object behind these Schemes.
I hope that tonight we shall hear some estimate of the cost of the Schemes. I am not sure whether the Minister gave that information. If he did, I did not hear it. The Government must bear in mind the unsettling effect of continuing increases in interest rates. This is holding back modernisation. The 1956 Report of the Authority refers to the unsettling effect and that, with Government Departments, it was considering the possibility of modifying present arrangements so as to remove that uncertainty. We have not the Report for this year, so do not know what has been done. But we should like to know whether anything has been done as a result of the discussions between the White Fish Authority and Government Departments. Unless something, is done, I doubt whether we shall see the end of this subsidy in 1961, which is the hope of the Minister.
Part of the subsidy is undoubtedly made necessary by wasteful handling of the fish at the ports and the methods of distribution throughout the country. I

believe that these are factors which must add to the eventual cost of the fish, the difficulty of selling it and, to some extent, the prices which are paid to the fishermen themselves. We are told by a member of a work study unit of the British Productivity Council, after a study of the handling of fish at the Aberdeen Fish Market, that it was "frankly appalling," and that from the time the fish came out of the ship's hold until it went into the railway wagon, it was a disgrace to 1957. He said:
I have never seen more handling of a commodity in a small area even in the fish industry.
What is to be done about these conditions? What can we do to stop this business, which he called "appalling," because I am absolutely positive that this is not unique to Aberdeen? Conditions which exist there in the fishing industry exist, I am sure, elsewhere; very much the same sort of thing exists in other of our fishing ports.

Mr. W. S. Duthie: Did that report make reference to hygienic conditions, or was it concerned only with the multiplicity of handling?

Mr. Champion: He was there interested in the multiplicity of handling, which was the point he was making there. He was not there to look at hygiene, but was there for the specific purpose of studying productivity. He was, as I have said a member of the Productivity Council's unit.
I now wish to ask the Minister what is being done in Britain by means of research into the use of antibiotics in fish preservation. This is an important point for the economy of the industry as a whole. To be able to market a catch in good condition is essential. A study, published in 1950, into the cost of distribution of consumer goods in the United Kingdom put the cost of distribution of fish higher than that of any other commodity with which it was sold in conjunction. A recently published report of an inquiry held into the white fish industry and the distribution of white fish corroborates that and shows that the expense ratio rose in proportion to the total of white fish in the total purchase.
Some research has gone on into this matter. It was started in Canada. I


wonder what was done on this side, because, undoubtedly, it does hold out some promise, and I think that the Minister himself ought to stimulate research into the use of antibiotics in the preservation of fish. Apparently, it is something which will enable us to get over some of the distribution difficulties.

Mr. Hector Hughes: As my hon. Friend has made adverse comment upon Aberdeen fish markets and the handling of fish there, and then passes on to the scientific side, may I ask him whether he would think it fair to say a word about the work which is being done by the Torry Research Station in Aberdeen?

Mr. Champion: I am grateful to my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes). The criticism of Aberdeen was not made by me. It happened to be that of someone who had conducted an investigation into the methods used at Aberdeen on behalf of an authority, and I merely quoted his words. I also pointed out, as my hon. and learned Friend will remember, that I am of opinion that it would apply not only to Aberdeen.
I thank my hon. and learned Friend for the point he made about the Torry Research Station. I hope it will be stimulated into an investigation into the use of antibiotics, if it has not already begun. If it has, I should be glad to hear about it from the hon. Gentleman who is to reply to the debate.
We welcome the fact that the Minister has set up an independent inquiry. We wish well to those appointed to it. We wish them well in what is undoubtedly a great task, but we feel that an inquiry of this sort cannot be a substitute for wise Government action. There are some things that the Government can do at once and particularly in the matter of the interest rates charged to those who set out to modernise their craft.
This is a great industry, vital to the British people and employing, as the right hon. Gentleman said, some of the pick of our countrymen. We must make it sufficiently prosperous to keep men employed in it, and at a good standard of living. At the same time, it is the job of this House and of the Government to help the industry to stand completely

on its own feet. We welcome the Schemes and will assist their passage through the House tonight.

10.26 p.m.

Lady Tweedsmuir: It is with real regret that I find myself unable to support the White Fish Subsidy Scheme. If there were to be a vote tonight, I should have to abstain. I should not vote against it, because some subsidy is better than none. This is a matter of deep concern not only to Aberdeen, as the largest fishing port in Scotland, but to all the white fish industry in Scotland as a whole.
I realise only too well my right hon. Friend's difficulty, and that he is asked to economise, although I could not help noticing that an extra £100 million was announced this week for transport. Of course, I realise the extreme difficulty of getting the right balance in a subsidy to ensure an economic fishing fleet. We are, however, asked now to consider exactly the same interest rates as were current last year, with only one alteration—

Mr. E. G. Willis: Subsidy rates, not interest rates.

Lady Tweedsmuir: —namely, that the limit on the number of days at sea to qualify for the subsidy has been removed. I thank the hon. Member for his correction.
I realise that the Minister has expressed the concern of the Government as a whole for the future of the industry by announcing the appointment of an inquiry, but such an inquiry is likely to take at least two years to report, whereas we are faced with immediate and pressing problems which have to be met.
Everybody would prefer a fishing industry that could carry on without Exchequer assistance. What, then, is the object of this subsidy, which the House has approved in the past? The Minister has just said that its object was to tide the industry over a difficult period while the near-, middle-water and inshore fishing fleet is placed in a sound economic position with the help of grants and loans for new building to replace the old coal-burning vessels. That is the object of the subsidy, as my right hon. Friend has repeated tonight.
Surely, the £19 million which is payable for all purposes up to 1961, and


possibly 1963, can be apportioned by the Minister as he thinks fit. My quarrel is that the subsidy rates have not been adjusted for the white fish industry to meet its current problems, as has been done for the herring industry.
My right hon. Friend said tonight that he could not increase the rates and remain consistent with his policy of ending Exchequer assistance by—I say 1963, because that is the limit to which at present it can go; and yet it has been done in the case of the herring industry. In my view, these increases have been made to stop the drift from herring fishing to seine netting. It is precisely to stop the drift in capital from white fishing to other industries that some of us have urged action long before these Schemes were drafted.
As the House knows only too well, Aberdeen has the largest number of coal-burning trawlers in the United Kingdom. Indeed, three-quarters of the Scottish white fishing is done with coal-burning vessels. The fishing and ancillary trades in Aberdeen give employment to one-third of our people. Therefore, it will be seen why there is a great deal of concern about the level of these subsidy rates.
Of course, everyone who knows this industry wants to see a modern fishing fleet. I only support paying a subsidy for old coal-burning vessels for a limited time in order that the scrapping programme should not be too swift for the capital available for new boats and the capacity of the yards. There would, I suppose, be a certain logic in being ruthless by operating the present subsidies for coal-burning boats to force their rapid breaking up, because of their hopelessly uneconomic operating costs. The Minister said, earlier, that he envisaged that the whole coal-burning fleet would go in four years. Our yards are already full as it is. How are we to keep up the fishing capacity of the port of Aberdeen?
If we are to follow a ruthless policy of scrapping the coal-burning vessels we ought to give substantial encouragement to both the oil burners and the diesel burners north of the Border, because, without doubt, the trading accounts at the moment are showing disturbing losses. Indeed, these figures have been accepted by the Department. I stress this, because the Minister mentioned that there were somewhat gloomy forecasts of the trading

accounts for this coming year. I certainly recognise that there is some element of depreciation, but, taking all that into account, the estimate of loss in the year 1957 to 1958 shows nothing but a heavy loss. It is not much good asking the fishing industry to submit figures to the Department if no action is then taken upon them.
The total fleet fishing from Aberdeen is 158 boats. We have 134 coal-burning vessels. The loss per boat last year was £1,600 and it is estimated that in the current subsidy year it will be £3,484. We have six oil-burning boats, of which one is not receiving subsidy. The estimated loss is £2,987; the loss last year was £1,223. Now there are 12 diesel boats. The estimated loss for the coming year is £4,121 and the operating loss last year—for only two boats, I admit—was £2,153.
I realise that the diesel boats have not been operating long enough to enable us to draw a true picture, but, nevertheless, I submit to the House that the purpose of the subsidy is to tide over the interval until the new boats are established in operation and in sufficient numbers for the industry of these ports. I know that the British Trawlers' Federation has asked for a 50 per cent. overall increase and that Aberdeen itself has asked for a good deal more, but the point is that it is perfectly evident that even if we take a figure far below 50 per cent. we shall still need some increase merely to break even. Unlike other industries, the fishing industry does not pass costs on to the consumers—except by scarcity—because fish is auctioned in a public market.
The Minister has acknowledged this evening the very disquieting effect of the difference in costs and losses between England and Wales and those in Scotland. Although it is well-known that we are 24 hours steaming nearer the main fishing grounds this geographical advantage is far outweighed by other geographical disadvantages—long distance from the markets, heavy freight charges for the transport of coal, and so on. As the hon. Member for Derbyshire, South-East (Mr. Champion)has said, no doubt much could be done in improving handling and distribution, but it becomes a vicious circle because people will not put a good deal of capital into improving distribution and


handling unless there is some confidence about the future of the industry as a whole.
I readily appreciate that it is to try to reach the root of these problems that the Government intend to have an inquiry into the United Kingdom industry as a whole. That is very welcome indeed. I hope that the terms of reference will not preclude consideration of the possibility of Exchequer assistance after 1963. I certainly do not advocate a permanent subsidy now without knowing the facts. If, for any reason, it is discovered that the geographical disadvantages to which I have referred are so great that it is not possible economically to operate a sound fishing industry from our main port of Aberdeen, there is justification for a subsidy on one point only, and that is for a strategic reason. To ensure our supply of food and to maintain a recruiting ground for the Navy, which has done so much for us in the past.
It has been said that fishing cannot be compared with agriculture because it does not face foreign competition. I submit that there is fierce foreign competition in two respects: first, that of over-fishing, hence the necessity of enforcing the International Over-Fishing Convention; secondly, if the Scottish fleet were reduced at too drastic a rate, foreign landings would increase despite a 10 per cent. duty. Fish caught by foreigners comes into our ports because there is no market in the fishermen's home country. It has to be dumped, and a 10 per cent. duty is no discouragement in such circumstances.
If the object of the inquiry is to determine the size and pattern of an economic fishing fleet in the United Kingdom, no doubt it will examine the level of grants and loans available for new boats under the White Fish and Herring Industry Act. Whilst I agree that they are generous, I support the hon. Member for Derbyshire, South East in saying that the interest rates should be re-examined, because the White Fish Authority's Report for the year ended March, 1956. states quite clearly that
At present, the rate chargeable to borrowers is the rate in force at the time loan instalments are drawn and consequently prospective borrowers have no certainty as to their future commitments for interest when applying for a loan. This has had an unsettling effect …

Would it not be possible, when we debate these subsidies in future, to have a report from the White Fish Authority for the year which is supposed to end in March, 1957? If we adjourn next week for the Recess it means that we shall not have an opportunity of discussing the Report until late autumn or winter this year. If the Report could be produced two or three weeks earlier it would be a great advantage.
As to the amount available from this grant and loan scheme, if we are really serious about getting swifter investment in new building there is a case for review, because conversion grants for conversion from coal burning to oil burning do not apply to the majority of boats in Aberdeen. Therefore, our fishermen cannot take advantage of the scheme.
Vessels in Aberdeen today are from 115 to 120 feet long, and cost roughly £1,000 per foot. While I acknowledge that one can obtain grants of £30,000 and loans of up to 60 per cent. of the cost and that all the individual has to find is 15 per cent. of the original capital, nevertheless, £120,000 for a boat is a hefty cost.
In view of all that has happened, I am very concerned about what is to be done in this coming subsidy year. Aberdeen is the largest port in Scotland and is fully representative of the problems of the Scottish white fish industry as a whole. The fundamental issue at the moment is one of confidence. Attracting capital to the fishing industry since the war has been a long and difficult business. It may well be that much more could have been done in the past by putting capital back into fishing, but that is now history. Our concern at a time of competing claims on our resources is that the Government should show an earnest of the country's recognition that the fishing industry is as vital in peace as it certainly always is in war.

10.41 p.m.

Mr. James H. Hoy: I shall deal later with some of the issues raised by the hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir). I agreed with a great deal of what she said, and I was very glad to hear her say that she could not go into the Lobby in support of the Scheme and that if it comes to a vote—as perhaps it will—she will


find herself unable to support the Government.
The very nature of the Minister's speech made it almost impossible for any Scottish Member to go into the Lobby tonight in support of the Government's proposals. The right hon. Gentleman himself said that while there might have been a general improvement in the white fish industry, that could not be said for the near- and middle-water fleets of the Scottish ports. He admitted that there was a case for making a difference in the subsidies for Scottish ports.
In that case, it is very difficult for those of us who represent Scottish constituencies to understand why the Secretary of State for Scotland did not insist on the grants being sufficient to meet the need which the right hon. Gentleman proved tonight. I can only believe that the Scottish Office does not have sufficient interest in the case.
I know that the Secretary of State and the Joint Under-Secretary were not ignorant of the facts, because I took a deputation to the Scottish Office and met the Joint Under-Secretary. He and his advisers did not dispute the facts and figures which were put before them. As the hon. Lady said, these facts have been submitted by the Scottish industry as a whole. The hon. Lady asked a pertinent question when she asked what was the use of supplying figures if attention was not paid to them.
The Scheme is an improvement on the previous plan. It has removed harmful anomalies and there is a better understanding of how it works. But despite increases, subsidies have not kept pace with rising costs. To that extent, Scottish fishing ports now find themselves in a much worse position.
One of the things which the Minister must take into account, even if his Scottish colleagues will not, is that a great deal of the Scottish catch has to be exported from the ports for sale. In my constituency, 70 per cent. of the catch is sold outside the constituency. That entails tremendous costs for boxing and freightage. I am glad to notice that I have the approval of the hon. Member for Fife, East (Sir J. Henderson-Stewart). He appreciated this problem when he was at the Scottish Office, certainly as it affected the port of Granton, where

the tremendous on-costs of the fleet was recognised. I would not seek to compare in size that place with Aberdeen, but there are 40 trawlers fishing from the port and it makes a substantial contribution to the economy. It affects not only the people who man the trawlers, but also the ancillary trades connected with the port.
I am told that when the Minister agreed with these subsidies, he made it perfectly clear that he would not take account of the interest on the money borrowed to provide the now trawlers. I am certain that he does not take into account the interest on the initial sum which is laid down. As has been said, if it is proposed to build a modern diesel-engined vessel of 120 feet the cost is about £120,000 or £130,000, and on the date that the order is placed 15 per cent. of the money has to be laid down. Interest charges have to be paid on that money, and it is a heavy drain on the industry.
I have raised this matter time and again with the Minister and with the Scottish Office. If the Minister is proposing to ignore these things, it seems to me that he is not meeting the just claims of the people in the fishing industry. I will not quote the figures again, but I will content myself with saying that in one case, which I have already brought to the notice of the Minister, on the day the vessel was ordered interest rates were 3½ per cent.; but before the vessel was completed that figure had increased to 5½ per cent. Surely the Minister must take account of that.
It is very glib for the Minister to say that we have to get rid of the coal-burning vessels by 1961 and that the Government cannot go on paying subsidies. I do not know where the right hon. Gentleman gets his courage when it comes to dealing with the fishing industry. He does not speak with the same voice when dealing with agricultural matters. Recently, he demanded a supplementary estimate of £24 million to meet the deficit on eggs and apparently he had no trouble in collecting the money. But when the fishing industry asks for a little money to meet the difficulties which the right hon. Gentleman agrees exist, he cannot find any.
What is the use of the right hon. Gentleman saying that we have to get rid of the coal-burning vessels when, at the same time, the Government restrict


credit and increase interest charges? The Minister must know that it is nonsense to do these things and also ask for the abolition of the coal-burning vessels and their replacement by a new fleet of dieselengined vessels.
I defy the Minister to say that my constituency has not done its best to modernise its fleet. It has been remarkably progressive. Let me take three examples—the figures have been submitted to the Scottish Office—of modern vessels which show losses, one of £5,000 for a year's fishing, another of £2,125 for 291 days, and the third of £1,801 for 327 days. These are actual losses on modern vessels. The Minister says, "Despite all that we shall not give you a penny more. We hope that you will be able to get money somewhere to modernise the rest of your fleet." What encouragement is that to people, who get such bad results and get no assistance from the Government, and certainly not from the Scottish Office?
As a consequence, one firm in my constituency has advertised for sale a new boat of which it took delivery only in March this year, and is advertising its willingness to sell another which is due for delivery in September—to sell it before it is delivered. One of the most go-ahead trawler owners has decided that the new boat of which he is to get delivery in a month or six weeks' time will not be fished from the port of Granton, but will be taken further south. It seems that this will go on and on.
Unless the Minister does something about it, this will be the death-knell of of my area. It is no use having an inquiry if we have first to exhume a corpse to find out what went wrong with it. It is much better to prevent the death from taking place. The Minister could do that by bringing in a subsidy.
It is sheer nonsense to say that the industry in our part of the country does not have to meet foreign competition; of course it does. The middle-distance boats which I have been discussing have to meet the competition of the Icelandic fleet, which is most heavily subsidised. I am told that the subsidy in Iceland runs to as much as £50,000 per boat every year. They are in the farming class in subsidies. The Minister expects our boats

to compete with that type of subsidy. He must realise that it is impossible.
If the Minister who is to reply cannot make a better speech than did the Minister who presented these schemes, he will not get away with it with the Scottish fishing industry, which will always have the feeling that it has been let down completely. I hope I will not have to say that to the industry when I return to Scotland. I hope that the Minister will take cognisance of the position of the Scottish fishing fleet and will give it a better promise than was given by the Minister of Agriculture, Fisheries and Food.

10.55 p.m.

Mr. W. S. Duthie: Had my right hon. Friend, in announcing these subsidy schemes on 15th June, not mentioned that a committee of inquiry was to be set up to look at the problems of the fishing industry, those whom I represent and I would have viewed these subsidies with the gravest misgiving and concern. The committee is overdue and I hope that no time will be lost in announcing its terms of reference and composition.
Every effort should be made by the committee to get out its report as soon as possible. Indeed, there should be an interim report, dealing with two main considerations. One of those is the question of the near-water trawlers, which has been so eloquently dealt with by my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir)and the hon. Member for Leith (Mr. Hoy). The other question concerns the problem which confronts the ring net fishermen in the West of Scotland and particularly on the Clyde. Those two matters are crying out for immediate examination and redress.
My hon. and gallant Friend the Member for Argyll (Sir D. McCallum)is ill in hospital and has asked me to say certain things for him about the plight of the ring net men on the Clyde. I have the honour to represent the inshore white fishing industry and the herring industry. The herring fishing is practised by drift net fishermen, and not ring net men.
It is extremely important for Scottish hon. Members to bear in mind that not one Scottish catching body has agreed


with these schemes we are discussing. The Scottish Office has produced a summary of earnings of fishing vessels for 1956 both for white fish and herring. I would draw particular attention to the wages that are earned by crews because, when all is said and done, one of the gravest concerns we have in the industry today is the manning of the vessels. The drift from herring fishing to seine netting and from seine netting to shore jobs is caused by the difference in remuneration and working conditions.
According to the summary of the Scottish Office, fishermen in vessels up to 40 ft. in length earn £9·31 per week, and in vessels of 40 ft. to 70 ft., £11·79 a week. The Scottish Inshore White Fish Producers' Association, which is the body representing seine net fishermen in Scotland, has also made an analysis. Its figures show that for vessels up to 40 ft. the wage has been £8·52 per week and, for a vessel 40 ft. to 70 ft., £10·56 a week. That works out, in the case of the smaller vessel, at 2s. 4d. an hour and, for the larger vessel, at 2s. 1¼d. an hour. It must be borne in mind that is for an 80-hour week. The average manual worker on shore skilled—the fisherman is skilled—gets an average £24 7s. a week for the same hours of work.
When one is considering the earnings of fishermen it is absolutely essential to realise the hours put in together with the hazardous conditions which have to be faced. In addition, the Association showed that there have been unavoidable increases in running costs since August, 1956. On ropes alone the increase has been £51 in the year. On manila for halyards, it has been £2; for fuel oil, an average of £94; lubricating oil, £8, seine net twine, £1; wire ropes, £2; and Burjac, etc. floats, £6. That does not take nets into account. It is a total of £154, but the subsidy is unchanged.
Our fishermen are progressive; they must be, because they have competition from fishermen of other countries. Consequently, they have to install scientific equipment as it becomes available. Practically all our go-ahead fishermen have been installing the Decca navigator, which is another item, amounting to £395. The grand total, on average, is £559 increase in costs for equipment alone last year.
The average net profit has also been worked out by this survey. The survey

shows that on vessels up to 40 ft. it has been 6·73 per cent. on the capital invested; 40 to 70 ft., 10·23 per cent.; 70 to 80 ft., 2·87 per cent. These are not large returns on investment, and when one considers the hazardous conditions of the work to be undertaken it is clear that they are pitifully small. When one takes into account the fact that expenditure on nets is not included as a capital outlay, the computation is blown sky high.
We need a subsidy to retain men in the industry. We need a subsidy to make the industry pay. It is all very well to express a pious hope that the need for the subsidy will expire in 1961. I assure hon. Members that the subsidy will be necessary until an equitable price for fish is forthcoming from the public. No one can put a time limit on the need for this subsidy.
The Scottish Inshore White Fish Producers' Association has shown the case for a subsidy of 1s. a stone, and I think that that rate is warranted, but we must accept the present figure because if we reject these schemes the subsidy on white fish will terminate at the end of the month and the subsidy on herring will terminate on 31st August.
Let us look at the herring fishing situation. Our drift net men are to have a small increase in subsidy but the standard of values in the herring industry is pathetic. The values are all hinged on the Russian contract. The Russian contract has set the standard of values in the herring industry. That is all wrong. We are faced with the fact that for two years we have had a failure in the herring industry. We can only hope that this year the shoals will be abundant; there are indications that they have been obtained at Shetland. The fishing season should at present be in full swing on the north-east coast of Scotland, but the fish are very patchy and we shall have to wait for the East Anglian campaign. It may well be that this subsidy will be totally inadequate. It would be reasonable adequate in fair fishing but certainly not if the conditions of the last two years are repeated.
Unfortunately, the Herring Industry Board has entirely lost the confidence of the herring fisherman. We cannot deny that. Something will have to be


done about reorganisation, and I sincerely hope that one of the problems which the committee will consider is the need for a central authority for the whole of the fishing industry. We should do away with the White Fish Authority and with the Herring Industry Board and have one central authority, adequately manned to do the job.
My hon. and gallant Friend the Member for Argyll has asked me to speak about the ring net fishermen in the Clyde, and I should like to say what I believe he would have said had he been here. The position of these ring net fishermen in the Clyde is disastrous. They are catching largely for oil and meal. The price for oil and meal at the "A" ports is 40s. per cran. But in the Clyde the price is 20s. per cran. Thus there is an absence of equity, because the owners of the ring net vessels in the Clyde have the same liabilities to meet as those getting 40s. per cran for their herring.
It is a fallacy for anyone to say that the subsidy makes up the difference. The subsidy is uniform. The man getting 40s. for herring is also getting the subsidy. Since two vessels together—as there would be in ring net fishing—are getting £6 10s. per day, per voyage, this means that between the two vessels they are getting the difference between 20s. and 40s. a cran for 13 crans of herring, and that anything caught over that shows a loss to those fishermen in comparison with those fishing at "A" ports. In fair fishing conditions, these men are at a great disadvantage.
I say that even now there should be a reconsideration of the position of the ring net men in the Clyde and on the west coast of Scotland. If that is not done, this section of the industry is finished; and we cannot spare seamen of this quality in Britain today.
There are many facets of the industry to which the committee of inquiry can, with advantage, pay immediate attention. I sincerely hope that the outcome of these investigations will be a realistic approach to the problems of the industry, and that we will get clear of all this Civil Service guesswork which is befuddling us at present.

11.7 p.m.

Sir David Robertson: To me, there is something

unreal about this debate. The Minister has said that the Scottish boats are not doing so well as the English boats. Although no one will challenge the ability of the fishermen, or skippers, I think I can tell the Minister where the difference lies.
The cost of freight from Aberdeen and ports to the North is double that to the markets of crafts fishing into the Humber or Fleetwood. That in itself is a tremendous item. It would account probably for the whole of the difference between the small profitability of the English boats and the losses of the Scottish boats. When one adds the cost of oil, considerably more in the north of Scotland than in Fleetwood, Grimsby and Hull, these are additional costs.
If all the other costs were equal, there would be a just case for a greater subsidy for Scottish craft than English. No one could challenge that. Yet we are asked tonight to pass a flat rate subsidy.
The Minister talked a great deal about the committee, and in his closing words Mr. Deputy-Speaker suggested that he was out of order. I want to say something about that committee, too. I think it is wholly unnecessary. All the problems of the industry must be known to the Ministers concerned and to their officials in London and throughout England, and in Edinburgh and throughout Scotland. These able men are the inheritors of work done by others. It has been a constant study and fishing has been under constant supervision. In addition, we have the White Fish Authority and the Herring Industry Board.
I remember the days when all we had was a small Fishery Department in Scotland and a small office in Whitehall. If the fishing industry wanted assistance, it went there and got it. That was a small and compact organisation. Now we have great Ministries in London and Edinburgh and offices at ports up and down the country. Tonight, we are told that we must have another committee comprising probably people who know nothing about the industry—to come in and tell the Minister what the problems are. Could there be anything more ridiculous than that?
I see, Mr. Speaker, that you do not want me to talk about the committee, but we must bring this debate back


to a realistic basis; and there is nothing more unrealistic than a proposal of that kind at this hour of great peril to the industry, when, as my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir)said in her very able speech, it is action now that is wanted. We do not want another committee to report in a year or two's time to tell us what has to be done. I will say no more, Mr. Speaker, about the committee.
The main problem of the industry is the lack of catches. Thirty or forty years ago, all the trawlers operating from British ports fished in the North Sea, the Irish Channel, the English Channel and round about our coasts. There were practically no distant water trawlers. The home trawler owners, however, because of the lack of catches and because of over-fishing on the Dogger Bank and all the other well-known banks and in the inshore waters, tackled the speculative task of building very large craft to go to the Arctic. They did that solely because they could not make voyages pay. In 1913, we had over-fishing around our coasts and catches were going down and down. The seas had a rest during the First World War because of the calling-up of the men and trawlers and drifters and the existence of mines, and for a few years afterwards there were abundant catches. Then we got back to a period of over-fishing.
The sole reason that the Aberdonians carry on with their decrepit old craft, which have served the nation so well for a long period—many of them are forty years old—is that in many cases they have no capital value in their books and no depreciation charges to wipe off. They stand at no value or at a token value of, say, £1. In contrast, the modern craft, a 120-footer costing £130,000, requires a large sum per month for depreciation over and above all the operating costs.
The reason that the Aberdeen trawler-owner is unwilling to take the generous grants and loans from the Government, leaving him to find only 15 per cent., is that he cannot see that if he builds the asset it will be profitable. No greater proof is needed than the speech of the hon. Member for Leith (Mr. Hoy), who said that trawler owners with ships on order and coming off the stocks now and in a few months' time were selling them. That, surely, is all the evidence that

Ministers require of the need for something to be done now.
My concluding words are these. If my right hon. Friends would devote a little attention to making the Over-Fishing Convention work, and would protect cod and haddock in the same way as they protect salmon, trout and grouse, we would be on the way back to prosperity: but we will not be until then.

11.13 p.m.

Mr. Richard Stanley: I feel rather an interloper in this debate, because so far it is only Scottish Members who have spoken. I am very sorry for them, because it is quite obvious that fishing in Scotland is in a bad way, but it is likely that once again England will come to the rescue, because we produce about 90 per cent. of the catches.
Whilst I sympathise with Scottish Members in their difficulties, particularly concerning freight charges, about which everyone is sympathetic, they must remember that there are ports in England to which the boats have to steam an extra long way back to get round Scotland to land their fish. The Scots must not think that they are the only people who suffer great hardships.
I join other hon. Members, however, in saying that I am disappointed with the Scheme. My right hon. Friend certainly has not been at all generous. He appears rather to try to overcome any criticism by saying that he is setting up a new inquiry. Surely we have all had enough inquiries. The only lucky thing about this is that there is not to be a Royal Commission. That would take five years instead of two, but could I ask my right hon. Friend to request the inquiry to be as quick as possible? The uncertainty of saying that subsidies are to stop in 1961 is most unsettling, and I ask that the trawlermen should be given more hope for the future by the inquiry getting out its results with all possible speed. It will make a lot of difference to these men.
We have heard that the distant water ports, such as Hull, say that they do not want subsidies; but none except the distant water people believe that it is possible to go on without subsidy. We cannot be so silly as to put our heads in the sand in this fashion, especially when we know that all the other countries are


getting subsidies. I say that the Minister has been mean. For one thing, he has apparently left out of consideration the terrific rise in the price of coal and other materials. We have been talking today of inflation, and we all know that everything has gone up in price—except the price of fish; and as everyone with whom we are concerned tonight depends on the price of fish to earn his living, this seems to be the wrong way round. Indeed, the price of fish has been going down in the last few months.
My right hon. Friend really has two Ministries and he must find himself to be something of a fairy godmother or a devil. At the moment, with fish, he is the devil. He has been the fairy godmother to the egg scheme; whereas people used to go out for fish and chips for a cheap dinner they now have egg and chips. I do not necessarily complain, because I have a lot of egg farmers in my constituency, but it does mean that that good old meal of fish and chips is outdone by egg and chips.
If the Minister is going to have any alteration to his Scheme, I hope that he will not give way to the clamour of all the right hon. and hon. Members from Scotland. I am sure to be somewhat unpopular, because there are practically only Scottish Members here, but last time they achieved one of the greatest Scottish victories ever. I hope that this time he will stand up for England and let us have some of the "plums" which are going. My hon. Friend the Member for East Aberdeenshire (Sir R. Boothby)is not here. He is unfortunately ill, and we hope he will soon be better, but he was always very loud in his pleading for Scotland. Perhaps they were a bit frightened of him, but now that he is absent I hope that my hon. Friend will stand up for England and see us all go along together.
The Minister ought to remember something which has not been said tonight; that is, the terrific expansion of the Russian fishing fleet. It is multiplying in an amazing way, so that in four or five years' time there will be an enormous number of distant water trawlers, as well as supply ships in order to keep them at sea. That will mean, first, a flood on the market; then, over-fishing, and next, I suggest, a territorial waters limitation

so that we cannot go beyond three miles from our shore. I hope that my hon. Friend will bear that in mind. I imagine that the Russian fleet is completely subsidised and owned by the nation, which we do not want here. I hope that he will remember these things and give our people a chance.

11.20 p.m.

Sir James Henderson-Stewart: Hon. Members may recall that towards the end of the debate in which we last examined the herring industry subsidy scheme I said—and I think I was expressing the view of hon. Members in all parts of the House—that it was very necessary to make a thorough examination of the situation in the coming months and that if the Government were persuaded by the figures they collected that a change in the subsidy was necessary they should not hesitate to make it. It is clear that the Government have done that, and they now propose tonight an increase in the subsidy for the herring fishers. I think we ought to congratulate the Government upon that sensible step.
However, I share the anxiety which has been expressed all round about the proposals for the white fish side of the industry. I am sorry my hon. Friend the Member for Caithness and Sutherland (Sir D. Robertson)was critical of the idea of having an inquiry. My hon. Friend and I had the greatest possible respect for Sir Andrew Duncan, and Sir Andrew Duncan it was who conducted the first great inquiry into the fishing industry in the nineteen-thirties. I remember that very well, because I played a small part in engaging the attention of the House for that matter and in that way in getting the inquiry established. Sir Andrew Duncan did not know any more about the herring industry than anybody else, but he was a brilliant man, and the fact that he came fresh to the subject added to the strength of the report which was made. If an inquiry was needed then I am quite certain an inquiry is needed just as much now.
May I draw attention to one or two matters which need investigation. As the hon. Member for Derbyshire, South-East (Mr. Champion)said, the assumption we have worked upon so far has been that if we subsidise landings and assist the


building of new boats, then by 1963 the industry should be able to stand upon its own feet, and that we shall then no longer need subsidies. I wonder if that assumption is now right? It seems to me that that assumption needs investigation. If it were shown by investigation that it would be absurd to think any longer that we could put the industry right by 1963 we should consider our new plans now. That is the first matter needing investigation.
Here is another. My hon. Friend the Member for Banff (Mr. Duthie)has told us that the inshore fishermen generally have protested against the scales offered as being inadequate, and have Raid they will lose money. That may be true, but I must tell the House that just the other day I made it my business to find out what was happening in the inshore fishing in the Forth, and that I did not find distress there. In fact they are doing very well at this present time. Why is that? I do not know, but that sort of variation is to be found all round the country and even within individual ports. That ought to be examined.
Granton is another example on a larger scale. I agree with the hon. Member for Leith (Mr. Hoy)that there we find highly efficient fishermen and trawler owners. He knows I have the greatest respect for some of them. It is a very strange thing that a man like Mr. Crone should not be making a success of his boats. I do not understand it. That needs investigation.
As a result of a proper investigation it may be found that the subsidies have themselves got to be varied from one part of the country to another. It may be that in Scotland—shall we say, in Aberdeen in particular?—a different rate of subsidy is needed from that at Grimsby. I do not say it is, but it is possible that it may be.
We certainly have to contemplate that that may be so, if the facts given by my right hon. Friend tonight are true. If Aberdeen looks like going out of business—and that was what my right hon. Friend was saying and my hon. Friend the Member for Aberdeen. South (Lady Tweedsmuir)was confirming in her extremely well-informed speech—it is a very serious matter for Aberdeen. Either the fishermen must change their style of business,

or they must get some other kind of support from the Exchequer. I agree that we would be much better off without subsidies, but this is the age when it seems that we must help great national industries.
All these are matters of enormous importance to our constituencies, and the Government have done right in deciding to have this whole subject investigated. Somebody said tonight that the investigation may take two years. It would be a calamity if we did not receive a report on these vital matters long before that. I agree, therefore, that we should press for an interim report on major matters long before that—I should say within a year. I hope that my right hon. Friend will realise that those who support him and his colleagues view the situation with great concern. We welcome an inquiry, but we press that it should be conducted with the greatest urgency by a committee of outstanding authority.

11.28 p.m.

Mr. Hector Hughes: At this late hour I want to make only a few brief observations on these Schemes. It is a sad commentary on the way the Government regard the fishing industry that schemes of this kind should come up for discussion at this late hour of the night. It is well within the knowledge of the House that this happens. It is an utterly wrong way of dealing with this great fishing industry, which involves so many diverse phases, so many different problems and so much employment. Schemes of this kind should be brought before the House at a more reasonable hour when they could be properly discussed.
I intervened on the subject of the proposed inquiry into the industry when the Minister opened the debate. It is wrong that an inquiry of this kind should not be representative of all phases of the industry. When I questioned him, the Minister said bluntly that it will not be a representative inquiry. Why should it not be? How will it be an effective inquiry if every phase of the industry is not represented upon it? Ostensibly, the object of the inquiry will be to investigate the state of the industry. It should be in a position to adduce expert evidence on every aspect of the industry. Witnesses should be examined by members of an inquiry committee who know what they are talking


about. But the Minister says that it will not be a representative inquiry. I submit that it should be.
The Minister has said today, and on previous occasions, that he wants self-sufficient fishing fleets. It is perfectly obvious that he cannot get them unless the present problems of the industry are investigated by experts who know every phase of it. The best way is to have an inquiry which would be thoroughly representative of the industry in every way.
The hon. Member for Banff (Mr. Duthie)made an able and exhaustive speech. The hon. Member for North Fylde (Mr. Stanley)spoke of the competition from the Russian fishing fleets to which our fishing fleets have to submit. That is another aspect of the problems concerning the industry which should be thoroughly investigated. I ask the Minister to take all those into account before finally making up his mind about future policy.

11.30 p.m.

Mr. G. R. Howard: At this late hour I do not wish to detain the House. [HON. MEMBERS: "Hear, hear."] I am happy to hear that welcome to an Englishman who has had the temerity to enter a Scottish debate. The hon. Member for Derbyshire, South-East (Mr. Champion)raised a matter of paramount importance to the fishing industry when he talked about the handling of fish at the ports. That is something about which we have to think very seriously in the next few years. If the industry is to become self-supporting, we have to have some forward-looking policies about that.
My first subject concerns the bringing of fish in the country as a high protein food in good condition. There has been a reference to the Russian fleet. Some time ago we pioneered a new kind of trawling with two ships known as the "Fairtry" class which combines the rôle of a trawler and factory ship. The Russians somehow acquired the plans and built twenty-two of these ships.
That kind of fishing will be a major problem for us in the future. There is a great future for our industry if we organise fishing in that way. I have eaten some of the "Fairtry" fish. It is absolutely first-class prime fish caught off Newfoundland and frozen and processed

within half an hour of being caught. With the kind of fishing the Russians are now practising, with fleets staying at sea for weeks on end, with factory ships, store ships and so on, our industry will have some "headaches" in the future.
I hope that the inquiry to which my right hon. Friend referred will examine those matters and matters such as the quick freezing of the catch, adequate transportation in properly insulated rail vans, how far the explorator system will supply the needs of distributive districts, how far quick freezing is a help in remote rural areas such as mine in Cornwall.
Questions have recently been asked in the House about damage to our gear by the Russians. We must be sure that we have enough fishery protection vessels at sea. There are obvious reasons why we should have them to watch the Russians, but I do not want to dwell on that. Another point is that with the cutting down of the Royal Navy, the more fishery protection vessels we have the more sea-time naval officers will get.

Mr. Deputy-Speaker (Sir Gordon Touche): Order. The hon. Member is getting a bit far from the Scheme.

Mr. Howard: We need fishery protection vessels to do the job which their name implies.
Finally, I want the Minister seriously to consider the merging of the White Fish Authority and the Herring Industry Board. It seems to me that if we are to bring down the costs in this industry it could be far better done if these two organisations were merged, with possibly a branch office in Edinburgh—dare I say that in what is mainly a Scottish debate?—and the main office in Petty France in London.
There are two authorities dealing with grants and loans, and there might be an occasion where a man who had been refused by one authority might go to the other and get a grant. That might be quite all right, I do not know. But it would lead to more efficiency were there at least closer co-operation between the two bodies, if not a complete merger.
The inshore fishing industry has not the same complaints as can be voiced by those hon. Members who represent Scottish constituencies where there are fishing interests. But I hope that the inquiry


will soon result in an early report, because it is important that all the members of this great industry should be made aware of their future and feel that all the difficulties are being examined thoroughly and dealt with efficiently.

11.36 p.m.

Mr. A. Woodburn: The attitude and tone of voice of the Minister as he ended his speech gave me the impression that he had come to the conclusion that Aberdeen was to be left to perish. I may be wrong, but it seemed to me that the right hon. Gentleman had decided that Aberdeen was likely to be liquidated as an effective fishing port. That is a serious matter, because Aberdeen is a very important town. If things develop in the world as they are likely to do, Aberdeen may prove to be a vital place at which to have an efficient fishing industry.
It is one of the lifelines of this country in an emergency. An efficient fishing industry must be based on ports accustomed to deal with a fishing fleet. It is not only a question of what is to happen to the fishermen but of the survival of the nation, both as regards food and in times of emergency. These boats have saved the nation in two great wars. I hope it will never be necessary to use them for that purpose again, but it would be imprudent not to have them ready.
I sympathise with the desire of the Government to get rid of the old coal-burning vessels and replace them with modern vessels. But there is a danger that we shall fall between two stools in this matter. We may lose the coal-burning vessels before we have the new ones. If my hon. Friend the Member for Leith (Mr. Hoy)is correct, and I think he is, we have here the test of efficiency. But even efficiency with the present subsidies will not result in the survival of the industry unless something more is done. The Minister has to decide whether he will allow the new diesel engined vessels and the coal-burning vessels to go from Scotland and that before the matter is settled Scotland is to have no vessels at all. I hope the Joint Under-Secretary will be able to assure us that Scotland is not to be sacrificed by the postponement of a decision. It would appear better to have an inquiry to find out what should be done before we start doing the wrong thing. We must at least

make sure that the fishing industry survives until the inquiry is completed.
We have been mentioning only Aberdeen, but there are a lot of people outside there round the coast who are necessary to our survival. I hope that nothing will be done to depopulate this part of Scotland. One of the other policies of the Government is to find some way to make it possible for people in that part of the country to survive.
Again, we are falling between two stools; we are not getting people back to the herring and are losing them to the white fish trade. As the hon. Member for Banff (Mr. Duthie)said, they are not coming back into the direction of herring but are apt to go on shore, even with the increased subsidy. I do not pretend to be a prophet; these things are largely a matter of trial and error. I gather that the Government are now having another try whether the increase in the herring subsidy will help the process that we proposed in the earlier legislation.
I felt there was a lack of confidence by the Minister in his own policy. He was very shaky about putting it forward, as though he felt that it was not going to succeed. It is a gamble with the existence of a town, with the prosperity of one of the most thrifty and well-managed towns in the country. It has never begged from anybody, and yet it might not survive, if this goes on.
I was interested to hear the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir)and the hon. Member for Banff talking about subsidies. This matter is usually treated with some opprobrium, as though subsidies were some form of charity. I hope hon. Members will realise that this kind of subsidy is not a charity at all but is part of a national policy. If we are to have a fishing fleet the nation must see that it can work.
There are two ways of doing it. We have heard that the Russians are trying a new method by treating fishing as a commercial enterprise managed by the State on an efficient basis. They are putting the latest scientific improvements, at whatever the cost, into the ships, and are now beginning to catch fish on the latest approved lines.
We are fumbling along. If we believe this is the proper way to do it, and if


the fishers are to be the agents of the nation, we have to enable them to make a profit, or we have to provide the means and pay them a reasonable wage for doing the job. We cannot always go on chancing it, seeing whether it is a success, and then having another try. We have to find ways and means of having an efficient fleet and making it possible for the people in it to make a living, whether as employees of the community, as the Russians are doing, or by using them as farmers and paying them a commission. I wish we had a more comprehensive plan in which we could feel confidence.
We have been talking mostly of white fish, but some of the herring fishers are not feeling satisfied with their subsidy. On the Clyde they feel that they are getting rather a raw deal. They fish mainly for meal and are having different treatment from people in other ports. They feel that their interests are being sacrificed in this new deal. We want to keep the fishers in the Clyde ports in the winter; but is the Minister satisfied that they can make a living and that they will not disappear in this process of readjustment? The wind may have to be tempered to the shorn lambs and, as some hon. Members have suggested, we must have a variety of conditions to cope with the different conditions which people face in different parts of the country.
The herring fleet is suffering from the fact that the herring have disappeared. Many of the ways in which they could earn a living are no longer available. I hope, therefore, that the Joint Under-Secretary will try to reassure hon. Members who have been seriously disturbed by the statement of the Minister about the future of Scottish fishing.
For instance, is the Minister to do something for special conditions, such as the boxing at Leith and Granton, which was arranged for on a previous occasion? Is he to make arrangements in different parts of Scotland, and is it part of the policy of the Government that the fishing industry in its different parts should be sustained and maintained? I agree that the Government have a right to insist on efficiency, and if the industry is not efficient, of course, it cannot expect the nation to subsidise inefficiency; but we have been assured tonight that even the most up-to-date and efficient trawlers

are not making a profit but a loss. If that is the case, the industry cannot survive.
The question I put to the Government is, how is the industry to survive under this policy, and will it still be in existence to the necessary extent when the policy has to be reviewed at the end of the investigation by the Committee? Unless the Joint Under-Secretary can give the House those assurances there will be serious perturbation and very great alarm throughout Scotland?

11.46 p.m.

The Joint Under-Secretary of State for Scotland (Lord John Hope): The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes)complained about the lateness of the debate. I am sorry about that, but it was inevitable. However, I would congratulate him that, despite his dislike of the occasion, he has dressed so suitably for it.
I do not want to repeat the background of these schemes which my right hon. Friend delineated, but I should remind the House that they must be looked at in the terms of our present policy, which is that the subsidies should be temporary. That has a bearing on what I should like to say to the owners. I think it reasonable to suggest that, in deciding whether to build a vessel with a life of 20 or 30 years, owners should not be unduly influenced by a subsidy which is going to be abolished in three or four years' time. I think that a fair way of putting it to them.
Several hon. Members, the right hon. Member for East Stirlingshire (Mr. Woodburn), in particular, asked me to say something about the interim measures to save the industry from collapse. Of course, we shall watch the position very anxiously and carefully, but I would ask hon. Members not to forget that the appointment of a committee of inquiry does not mean that we shall not have to have another scheme next year, because we shall.
I know that I must not go into the question of the inquiry at any length, but I want to emphasise that our decision to appoint the committee does not in any way mean that we as a Government have not complete confidence in both the Herring Board and the White Fish Authority. When we were debating the last Scheme, there was a great deal of


criticism of the Herring Board. I rather regret that when I wound up the debate I did not then express the confidence of the Government in the Board. That was certainly an oversight on my part, and I think I have made it good by what I have said tonight.
The right hon. Member asked me to say something about the future. There is no reason at all to view the future with pessimism or gloom. There is no room whatever for complacency. There are disturbing figures and discrepancies, and that is why we are appointing the committee of inquiry. I was impressed, and the House must have been impressed, by the reasons given by so many hon. Members, sometimes deliberately in terms of the necessity for an inquiry and at other times not in those terms, all of which seemed to focus attention on the rightness of our decision to have this industry investigated. My hon. Friend the Member for Caithness and Sutherland (Sir D. Robertson)rounded upon us, referring to the "ridiculous idea" of having an inquiry, but in almost the next sentence he referred to the industry as being in a state of peril. I do not think that it is in a state of peril, but if he thinks that it is, he must agree that it is not a bad moment to inquire into it.
I will answer as quickly as I can some of the specific questions put to me. The hon. Member for Derbyshire, South-East (Mr. Champion)asked why the year 1961 had been chosen for the end of the subsidy. The answer is that that is the time by which it is estimated that the modern vessels will be on their feet and coal burners will virtually have disappeared. He asked for an estimate of the cost of these schemes, and the answer is £2,985,000. He and one or two other hon. Members referred to the question of interest rates. One question concerned the exclusion of interest on capital in costing. We have concluded that it would be wrong to discriminate between sources of capital, between the firm which borrows the capital required and the firm which finds the cost from its own capital resources. The discrimination is not easy to work or to justify.

Mr. Hoy: Will the hon. Member tell the House which firms are building fishing vessels from their own capital, without borrowing?

Lord John Hope: I cannot do so without notice, but I will inquire and let the hon. Member know.

Mr. Hoy: The hon. Member cannot find a firm which is building boats without subsidy. There may be firms which are interested in building for sale, not for fishing, but he cannot use that example when making a comparison with ordinary commercial fishing.

Lord John Hope: I will look into that. I entirely agree with the hon. Member that it is up to me to justify what I say to the House, and I am prepared to do so.
The hon. Member for Derbyshire, South-East asked whether experiments were being conducted with anti-biotics in fish preservation. When I visited Torry Institute recently I was given an excellent kipper which was six months old, and anti-biotics must have had something to do with that. I was unselfish enough to give it away and did not eat it myself, but I was told that it was delicious. The short answer to the question is that the possibilities of using anti-biotics are being carefully considered.
Now I come to the speech of my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir). I am sure the House would agree that she made a very well argued speech indeed. I fully understand the difficulties which she feels. She made out her case with great cogency. She referred to the length of time that the inquiry might have to last, and asked what would happen meanwhile. I have tried to deal with that important point earlier. She also asked why there has been an upward adjustment of the subsidies for herring, and none for the white fish. I think that she realises that we have done that to try to stop the drift from herring to white fish.
My hon. Friend asked, further, "Why not help diesels?" The answer is that, as she observed, they have had a very short experience so far, and we shall be very interested to see what happens in this current season. My hon. Friend hoped the inquiry would not exclude the possibility of recommending extention of the subsidy. I do not want to say any more about the terms of the inquiry. They will be extremely wide. She asked whether we could have the Report of the White Fish Authority next year in time


for reasonable discussion. I will see whether we can do something about this difficult business of timing. It is not easy to put this right, but if it could be done, it would certainly be worth doing.
The hon. Member for Leith (Mr. Hoy), although he did not mince his words in criticism of the Government's action, said that this Scheme is an improvement, at least, on the past because it removes certain anomolies. I am grateful to him for that observation. That is exactly what we have tried to do. The burden of his criticism was that, although we accepted the white fish industry's figures, having accepted them, we did nothing about them. The short answer is that, because we have been so impressed by the figures, we have decided that we must have the whole of the industry looked into. He outlined clearly the difficulties which face those people with whom he is most concerned. I know that they are very much up against it at present.
My hon. Friend, the Member for Banff (Mr. Duthie)supported us in our decision to have an inquiry which, he said, was overdue. He then embarked on criticism of the Government on the ground that, although costs had gone up, nothing had been done to recognise that in coming to our decision about the new subsidies. That is not so. These increases have been taken into consideration, but so has the expectation that earnings will go up at the same time. My hon. Friend and other hon. Members on both sides felt strongly about whether there should be one or two authorities. We must wait and see. [Interruption.] Well, we shall get a helpful slant on that, as on other things, from the inquiry. I do not think anybody could say that it was prima facie obvious that one authority would be better than two. Further than that, one would not care to go.
My hon. Friend spoke of the ring net fishermen, to whose so-called plight other hon. Members also referred. I wish that the figures for this part of the industry could be put over. I do not dispute the figures given by my hon. Friend, but he did not give the end result that from 13th May to 6th July the ring net fishermen qualified for about £5,000 in direct subsidy. Had the oil and meal subsidy been retained, they would have got, at most, about £1,000. The answer, there-

fore, is that the new arrangements have worked out very much to their advantage. I have already referred to the speech of my hon. Friend the Member for Caithness and Sutherland.
My hon. Friend the Member for North Fylde (Mr. Stanley)expressed various opinions, including the welcome one that Scotland had won a great victory last time, and he begged my right hon. Friend the Minister to stand up for England now. All I can say is that in this dilemma the Scottish fishermen think that the English have done best, and England considers that the Scots have done best. Therefore, with any luck, Her Majesty's Government have done about the right thing.
I will not go deeply into my hon. Friend's comparison of my right hon. Friend with a fairy godmother in the egg world, but no doubt there is something in that. His final point about the Russians is extremely important and I assure the House that the Government are well aware of the potential dangers on that front.
My hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart)gave the most convincing reasons of all for the inquiry and I am grateful to him for the eloquence with which he put the case persuasively. He mentioned the need for urgency, with which I agree.
I have tried to cover the main points. If I have omitted answers to any specific questions, I will try to remedy the deficiency later. I want to leave the House with the feeling that although the situation is extremely serious, and in some ports an extremely anxious one, there is no reason whatever for undue despondency or gloom. We mean to get the better of it.

Question put and agreed to.

Resolved,
That the White Fish Subsidy (United Kingdom)Scheme, 1957, dated 12th July, 1957, a copy of which was laid before this House on 15th July, be approved.

Herring Subsidy (United Kingdom)No. 2 Scheme, 1957, dated 12th July, 1957 [copy laid before the House, 15th July], approved.—[Ford John Hope.]

MERTHYR TYDVIL— ABERGAVENNY RAILWAY

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Barber.]

12.4 a.m.

Mr. S. O. Davies (Merthyr Tydvil): I do not feel that an apology is needed from me for detaining the House for a little longer tonight. If there are any angry glances, I hope they will be directed towards the British Transport Commission, because the matter which I am forced to raise is the threat to close down completely the railway known as the Merthyr Tydvil—Abergavenny railway.
This threat by the Transport Commission has caused consternation and even disgust among the people of North-East Glamorgan and North Monmouthshire, and in particular, the closing of the railway is strongly opposed by the local authorities in this area.
Briefly, the geographical position of this railway, which is 24 miles long, is that it passes through three counties, and some extremely beautiful places known to many people—such places, for example, as Govilon, Gilwern, Pontsarn and Abergavenny. It serves a potential public of some 200,000. I think that the Parliamentary Secretary will suffer from some disadvantage in replying to any case which I may be able to make on this matter because he will be aware that the subject has been referred to the Traffic Users' Consultative Committee. If he is inhibited in any way by that fact, I am sorry to tell him that I am not in the least; for the very sound reason that this Committee was a party, not long ago, to the closing down against all public interest, of a most important railway entirely within my constituency.
The reason given by the Transport Commission for this latest attempt is that the losses on this railway amounted to about £59,000. The Commission at the same time has tried to salve its conscience by saying that there are adequate alternative road travelling facilities available. I, and everybody who knows this railway from Merthyr Tydvil to Abergavenny, will say that that statement is far from being correct. I have taken advantage of the opportunity to raise this matter on the Adjournment also be

cause of the extraordinary means which have been adopted by the Commission in its efforts to try to prove that this railway is running at a substantial loss. A figure given by the Commission last April was £58,939; when the principal railway trade unions met to discuss the final closing down, the figure given was £30,000. But, whether the figure is £59,000 or £30,000, we can accept neither, thanks to the Transport Commission.
For reasons which I hope to make clear in a moment, we cannot accept them. The Commission tells us—and I want the Parliamentary Secretary to pay attention to this statement by the Commission—that the average number of passengers carried daily on this railway was 442. This figure was arrived at by taking "spot" tests in autumn and winter, although along this line, as I have said, there are some extremely beautiful country areas and, during the summer holidays, very many people make use of the railway. Last Easter, for example, an additional coach was put on to accommodate passengers, and on one Bank holiday last year 4,000 passengers boarded or alighted from the trains on this railway at the Abergavenny-Brecon Road Station.
I should say that the threat to close this line has been hanging over our heads during the last two years. The Commission has warned us of this, but it is pertinent to ask, if it has been the intention of the Commission to close this railway because of its losses, why a very substantial sum of money has recently been spent in the relaying of about eight miles of the permanent way—that is, about one-third of its length? All this has been done within the last two to three years; and what did this work cost? I am not able to say, but I have been told by competent railway men that it can cost anything between £20,000 and £25,000 per mile to re-lay the permanent way.
If the railway was to be closed, why did the Commission go to the trouble and the cost of painting within the last two years a number of stations on it, one of them in my own constituency? Again, why was a very substantial sum of money also spent quite recently on repairing the tunnel near Brynmawr? I am informed that a crack appeared in the tunnel thirteen years ago, but it had shown no sign whatsoever of any deterioration.


What moved the Commission to spend money on that tunnel when it was going to close both the railway and the tunnel?
We have got our suspicions. I must ask also—we are forced to ask, and I am not the only person living in that area who is now asking such questions—was this expenditure deliberately, wantonly incurred so that the Commission could point to the losses on this line and so justify the closing of it down? The thing has been so blatant that we cannot help questioning the logic and the motive of what the Commission has done. There are many who are asking such questions.
I am told by the Commission that it derives the greater part of its income from goods traffic. A very short time ago that railway was closed to goods or freight traffic. Just imagine what has happened since that was done. I have not sufficient time to give many instances that could be given, but I give three very briefly. In my own constituency there is a very important works which is connected with a great works on the North-East Coast. A spur railway runs from this one we are discussing into the heart of that works. It is only a few hundred yards long. When the Commission made it known that it intended to close the railway to freight traffic that great company, whose name is known to almost everybody in this land, approached the Commission and asked, "How are you going to deal with our traffic that comes from the North of England into our works and which goes out of our works to the North of England?"
The British Transport Commission said that it would deal with it, but instead of taking it directly across to Abergavenny it took it over a steep gradient through the Brecknock Beacons out to a remote country junction called Talyllyn and then moved it down to Abergavenny to join the north-south railway. Transport over this route, so much more difficult and more costly, is being undertaken by the Transport Commission at precisely the same charge as it made for the short cut across to Abergavenny.
Then there is the case of the great steel works at Ebbw Vale. This railway runs right alongside the works. The great quantity of coal used at the works is obtained from nearby Blaenavon. The coal used to be brought right from Blaenavon to the Beaufort junction and

into the works, a distance of less than eight miles. But this railway was closed to freight traffic. Now the freight is taken to the heart of the County of Monmouth. It has to negotiate extremely difficult junctions in narrow valleys and is brought to the works at Ebbw Vale after 30 miles of pulling, tugging and shunting.
Recently it was decided to work a considerable quantity of coal in this area by the open-cast method. The Commission was asked by the National Coal Board whether it would handle it on this railway. "We will not," was the blunt answer. Thousands of pounds are lost to this railway by the foolish refusal of the British Transport Commission to handle the coal from the open-cast works. It has to be handled on a frightfully difficult, circuitous and very slow route. We are told that there are alternative and adequate transport facilities by road. I have said that this is far from being correct. The road between Merthyr Tydvil and Abergavenny is notorious for its formidable toll of accidents which in the last two years have increased by more than 50 per cent.
Earlier this week I put on the Order Paper a Question to the Minister of Transport and Civil Aviation, which I naturally withdrew when I had the fortune or misfortune of being allotted the Adjournment tonight. It was:
To ask the Minister of Transport and Civil Aviation if, having regard to the threat of the British Transport Commission to dose down the Merthyr Tydvil-Abergavenny railway, he will cause an inquiry to be made into the bad state of the road connecting these two towns, particularly with respect to its long narrow stretches, and many bends in many parts. its steep gradients, and its icy and dangerous condition in winter because of its elevation and exposed nature; if he will also state the number of accidents on this road for the years 1954 to 1956, respectively; and whether he is satisfied that this road can provide reasonable alternative travelling facilities to the public in that part of South Wales should the railway be closed down.
That Question answers itself.
In the many years that this railway has been open, nothing has been done to attract passengers. Even today trains take one and a half hours to make the 24-mile journey from Merthyr Tydvil to Abergavenny. I have been looking at the lovely picture of the armorial bearings of British Railways. We have the word "Forward" above the arms and the words "Velociter Securiter" below. We


wish we could get a little of that on this most interesting railway.
No attempt has been made to establish reasonable train connections at Abergavenny for main line trains running between North and South Wales and the South of England and the North of England. Main line connections at Abergavenny are almost as bad as they are at Cardiff for the 150,000 people who wish to travel on the main lines from Merthyr Tydvil and the Aberdare Valleys. I am told that this railway is less efficient today than it was forty years ago.
I and my constituents and all those who are interested in this railway are asking whether it is possible to use the diesel services which have been so eloquently praised by the Chairman of the British Transport Commission himself. He has said that where they have been tried, they have brought in substantially more revenue, largely because they have attracted more passengers, given a better and more frequent service than steam trains, have been able to overcome gradients more easily and have given much more work. I am advised by those whose opinions I must respect that this railway lends itself admirably to the modern diesel service.
In Merthyr Tydvil we are extremely anxious about the future of other railways that serve our valley. The Transport Commission has made it abundantly clear how easily a railway can be made to show a loss. Our link from Cardiff to Merthyr Tydvil and mid-Wales can easily be made to show a loss, and it can as a consequence serve to justify the not very clean way the British Transport Commission stupidly disposes of this means of travel in the valleys of South Wales and Monmouthshire.

12.25 a.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): The hon. Member for Merthyr Tydvil (Mr. S. O. Davies)knows that I can make only a limited reply to him tonight. This matter is before the Transport Users' Consultative Committee for Wales and Monmouth which is acting as the investigator appointed by Parliament under the 1947 Act. Therefore it would not be proper for me to discuss in any detail the facts and the merits of the issues advanced by the hon. Member.
This Committee—as indeed are the other Consultative Committees—is composed of people with a wide range of interests and has the duty of investigating matters of this kind. It has already met twice and in September it is to have a further meeting and to make an inspection of the railway. It will then be able to investigate fully the points which the hon. Member has raised, and I am quite certain that the Commission would not put forward an unfair case. The hon. Member referred to the "not very clean way" the Commission acted. In saying that I feel that he was not making a fair remark. I am sure that he is not justified in saying such a thing and I feel certain that the Committee will investigate any proposal put before it. The hon. Member need not doubt that it will be done fairly and impartially.
It is the policy of the Commission to maintain branch lines in the rural areas as far as possible; but one must remember that these lines were laid down 100 years ago before the advent of the motor car and in very different circumstances from those which exist today. Inevitably the motor car has taken a great deal of traffic from the railways. In endeavouring to keep these branch lines in operation the Commission considers how to reduce operational costs and increase traffic.
The hon. Member asked whether it was possible to put diesel cars on this line. I do not doubt that the Commission has considered that point. It has developed different types of light diesel cars, and recently I saw one experimental type of light diesel being used on the Banbury—Bletchley line. That type of car is cheaper to run because only one driver is needed instead of two, and there is less maintenance work. It is also more attractive to passengers. Even so, there is a limit to what can be done with these cars. It is not always possible by their use to turn a large loss even into a bearable loss which the Commission is content to accept.
It is the business of the Commission to carry all the traffic it can and it does not intend to close down branch lines unless it has to; hut, taking one year with another, there is a duty imposed by Parliament to make the Commission pay. We have assisted it to engage in a great modernisation scheme in order to give the


country a first-class modern railway system, and in that context the Commission will certainly keep in use every branch line that it possibly can. I know the spirit of the men, particularly in this section. I was with them in South Wales not very long ago and I am certain that they are concerned to give the best service that they can to the local people.
I accept the hon. Member's comments about the road. I would not be capable of putting them in such poetic terms as he used but it is undoubtedly a narrow, steep and dangerous road. As the hon. Member knows, we have a very large-scale scheme indeed to connect the Midland cities with the South Wales ports by a first-class road. The Heads of the Valleys road will deal specifically with this section. It runs in two sections, the first from Bryn Mawr to Abergavenny. If my pronunciation is not quite right I have no doubt that the matter will be faithfully recorded in HANSARD tomorrow so that it may be understood. The second section is from Hirwaun to Bryn Mawr, so that the total length will run 25 miles from Hirwaun to Abergavenny. It will lead down to the coast

on the west and from Abergavenny it will join the Ross Spur and so up to the Midland cities.
That first section, seven and a half miles, is authorised to start this year and the second section next year. It is a very big scheme which will involve substantially rebuilding the present dangerous and difficult road. There the hon. Member has the certainty that we shall provide, and at very heavy expense, a first-class piece of road so that there will be adequate facilities to carry the very important road traffic that comes up from the South Wales ports.
Both these aspects will be taken fully into account by the Transport Users' Consultative Committee for Wales. I roundly assure the hon. Member that this Committee, composed of men and women of all walks of life and giving their time and voluntary service completely impartially, will give this matter its fair consideration and will reach a proper conclusion. I hope the hon. Member will accept my assurance.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes to One o'clock.